Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

Oral Answers to Questions — MINISTRY OF DEFENCE

Territorial Army

Mr. Hamling: asked the Secretary of State for Defence (1) what is the present strength of the Territorial Army, in officers and other ranks; how many units are below establishment; and whether he is satisfied that the present strength of the Territorial Army is sufficient to fulfil its future rôle;

(2) what has been the cost of the Territorial Army in each of the last five years; and what steps he is taking to reduce this expenditure.

Mr. Dempsey: asked the Secretary of State for Defence if he is aware of the importance of the Territorial Army; and if he will arrange for it to be more closely attuned to military conditions today.

Mr. Shinwell: asked the Secretary of State for Defence what proposals are under consideration for the reorganisation of the Territorial and auxiliary forces.

Mr. Goodhart: asked the Secretary of State for Defence what steps he is taking to reduce expenditure on the Territorial Army.

The Deputy Secretary of State for Defence and Minister of Defence for the Army (Mr. Frederick Mulley): At 31st May there were 9,022 officers and 99,741 other ranks in the Territorial Army. Units are not recruited up to establishment because since the last reorganisation volunteer recruitment has been limited to 123,000 all ranks, which is about 65 per cent. of the total establishment of 190,000. The

attributable cost of the Territorial Army was £31 million in 1962–63, £34 million in 1963–64 and £35 million in 1964–65, but no estimate is available for the years before 1962–63. I fully recognise the valuable contribution made by the Territorial Army. Its future rôle and organisation are under review and I cannot at present say what the outcome of this review will be.

Mr. Hamling: Will my right hon. Friend agree that in the conditions of modern warfare the present rôle of the Territorial Army does not fit modern requirements? Is this one of the topics which is in his mind in the defence review?

Mr. Mulley: In the review which is in progress we are trying to take account of all these factors, including the one mentioned by my hon. Friend.

Mr. Dempsey: Would the Deputy Secretary of State bear in mind that the Territorial Army is the first line of defence in the event of a national emergency? Although there is an argument in favour of reorganisation, would he also try to bear in mind the extraordinary voluntary service given by members of that body towards training during the civilian period? Would he try also to remember, when reviewing the future of the Territorial Army, that this is a measure of discipline for civilians who are interested in the defence of the country when he is reviewing the future of the Territorial Army?

Mr. Mulley: My hon. Friend will not expect me to anticipate today the statement which we hope to make later. All these factors will be taken into account. I should like to say how much I endorse what he said about the importance of the voluntary spirit and service given by members of the Territorial Army over previous years. We recognise that in the future, no matter what reorganisation or changes there may be, we shall be just as dependent on the good will and voluntary spirit of service which have been the characteristics of the Territorial Army over previous years.

Mr. Goodhart: Will the hon. Gentleman bear in mind that if a reduction of any sort is contemplated in the manpower ceilings for the Regular forces strong reserve forces will be even more


important? Will he bear in mind that it will be difficult to get the volunteers which are necessary if there is a wholesale slash of the units and associations which have commanded so much loyalty and affection in the past? Could he say definitely whether there will be a statement on the future of the Army before the Recess?

Mr. Mulley: We are fully aware of the importance of trying to make a statement at the earliest possible moment. If at all possible, we shall try to do so before the House rises for the Recess. I would ask the hon. Member not to anticipate that the changes which we may wish to bring forward will be of the catastrophic character which he indicated in his Question.

Mr. Shinwell: Is my right hon. Friend aware that this matter of the Territorial and Auxiliary Forces and the general reserve issue is of primary importance? Can we have an assurance from my hon. Friend that, before the Government come to a final decision, they will consult interested parties in the House?

Mr. Mulley: As my right hon. Friend the Secretary of State and I have said on a number of occasions, we want to consult all persons interested as fully as possible and I have already undertaken to consult the Territorial Council and the associations fully on the details of any changes proposed. But we have also given an assurance that the first statement of the Government's intentions will be made in this House and that, of course, inhibits the circle of consultation that can be undertaken ahead of such a statement on the principles of the Government's policy.

Mr. Soames: Will the right hon. Gentleman give an assurance—I understand that he intends to take this course—that he will hold discussions with the Territorial Council and the associations before he makes a final statement to the House?

Mr. Mulley: The consultations we have with the Council will depend to some extent on the wishes of the Council. The right hon. Gentleman will recall that he himself made a statement in July, 1960, and produced the resultant White Paper in the following November. We

expect a similar period to elapse while the details are worked out.

Sir Richard Glyn: Will the right hon. Gentleman take this opportunity to repudiate the story, to which his attention has been drawn and which was given considerable publicity in the Press some time ago, to the effect that the Territorial Army was to be disbanded?

Mr. Speaker: Order. That goes beyond the range of Ministerial responsibility.

Mr. Kershaw: Is the right hon. Gentleman aware that the House will have heard with some relief his sympathetic references to volunteer forces? Is he aware that the longer his decision is put off the worse it will be for recruiting for the present Territorial Army?

Mr. Mulley: We are, of course, concerned about the speculation in the Press and the uncertainty to which this gives rise, but the hon. Gentleman will agree that this is a complicated and difficult question. It would not have been the wish of the House that we should rush the matter and come up with an ill-conceived scheme. The few months that we have been engaged on the review so far were necessary for any Government to come forward with a set of proposals for a reserve army to meet existing conditions.

British Army of the Rhine

Mr. Rose: asked the Secretary of State for Defence whether, in view of the current rate of imports by the German Federal Republic from Great Britain, he will withdraw 500 troops from the British Army of the Rhine each week until 31st December, 1965.

Mr. William Hamilton: asked the Secretary of State for Defence what plans have been made to reduce the size and cost of the British Army of the Rhine.

Mrs. Renée Short: asked the Secretary of State for Defence if he will make a statement on proposals to reduce the cost to the British taxpayer of the British Army of the Rhine.

Mr. Goodhart: asked the Secretary of State for Defence if he will make proposals for reducing the cost to the British taxpayer of the British Army of the Rhine.

The Secretary of State for Defence (Mr. Denis Healey): The British Army of the Rhine is under review, together with all our other overseas commitments, and I cannot say at this stage what effect the defence review may have on its size or cost. On the extent to which the cost is offset by purchases of British equipment, I would refer to the statement by my right hon. Friend the Chief Secretary on 1st July.

Mr. Rose: While congratulating my right hon. Friend the Chief Secretary to the Treasury, may I ask the Secretary of State for Defence to make it clear to the West German authorities that failure to honour this agreement will lead to the progressive withdrawal of British troops from Germany? Is it not high time, since the danger of land war in Europe has receded, that we should review the whole question of keeping British troops in West Germany?

Mr. Healey: I think that one of the reasons that the danger of war in Europe has receded is that N.A.T.O. forces have been adequate to deter it, although I recognise the need for change in the strategy according to which N.A.T.O. forces are deployed. We have made no secret, in our discussions with the West German Government, of the serious consequences which might follow if we are not able to do better in future than in the past to meet the foreign exchange costs of British troops in Germany.

Mr. Hamilton: Can my right hon. Friend assure us that, in view of the fact that we are bearing an unfair share of the N.A.T.O. burden in Western Europe, we shall seek to reduce the number and cost of our troops in West Germany?

Mr. Healey: I have already made it clear to my Ministerial colleagues on the N.A.T.O. Council that we would seek to achieve a fairer sharing of the burden of Western defence. It is an ironic commentary on events of the last 20 years that West Germany gains about 1,000 million dollars of foreign exchange by participation in the defence of the free world while the United Kingdom is losing about the same amount.

Mrs. Renée Short: While not wishing to go as far as some of my hon. Friends in calling for the reduction of forces in West Germany—because it is essential to

maintain a British presence there in order to keep an eye on the activities of the present German Government—may I ask my right hon. Friend whether he would not agree that if we are to carry out the social programmes to which the Government are committed, particularly in housing, education and the National Health Service, it is essential to find some savings in the defence programme? Is this not a fruitful field where savings can be found? Will he give us an undertaking that very severe cuts will be made?

Mr. Healey: No, Sir. It is our purpose in the defence review to achieve savings in expenditure, but I must point out to my hon. Friend that the purpose of having troops in Germany is to co-operate with German and other allied forces in deterring aggression and not to keep an eye on the activities of the West German Government.

Mr. Goodhart: Does the right hon. Gentleman recall that the manifesto on which the Government fought the election contemplated an increase in the size of Rhine Army? Can he now say whether in his opinion the defence costs agreement that has just been negotiated is satisfactory enough to remove the whole question of foreign exchange pressure on our forces for the next two years?

Mr. Healey: On the first point, I am afraid that the hon. Gentleman's facts are as mistaken as his judgments on these matters. As to the second point: no, we do not regard the current agreement as wholly satisfactory, and, of course, we shall continue negotiations to try to improve it.

Jet Trainer Aircraft

Mr. Hastings: asked the Secretary of State for Defence how many jet trainers to be produced jointly by the French and British industries will be ordered by the Royal Air Force.

Mr. Healey: It is much too early to take a decision of this kind.

Mr. Hastings: Is it not likely that the Royal Air Force will be able to place only a token order for this machine and that it really fulfils a French need rather than a British need? Can he explain whether that is so? If it is, can he hold out some hope of a British project of


the same kind being given to the aviation industry before long, because if not it is doubtful whether the industry will be able to meet our defence needs in the 1970s.

Mr. Healey: The hon. Gentleman's logic rather baffles me, but I assure him that I expect a need for a very sizeable number of these aircraft as advanced trainers for the R.A.F. If we had not expected such a need we would not have made the agreement.

Sir J. Eden: Will the Secretary of State confirm that the Minister of Aviation has worked out manufacturing arrangements for this aircraft and that it is his intention that the Jaguar shall have, if possible, considerable export sale?

Mr. Healey: My right hon. Friend the Minister of Aviation is negotiating all the details to implement the Memorandum of Understanding that we made some weeks ago. It is certainly the intention of both the British and the French Governments that sales of this aircraft should be as wide as possible.

TSR2 and F111

Mr. William Hamilton: asked the Secretary of State for Defence whether he has yet come to a decision on whether to buy a replacement for the TSR2; and if he will make a statement.

Sir J. Eden: asked the Secretary of State for Defence whether he has now decided to take up the option on the F111A; and if he will make a statement.

Mr. Marten: asked the Secretary of State for Defence if he will now give an overall estimate of the cost of replacing the TSR2 by the F111.

Mr. Healey: No decision has yet been taken to buy the F111A or on the numbers of this type which might be needed if it were chosen to meet the Royal Air Force's long-range strike/reconnaissance requirement. I have therefore nothing to add to the assessment previously given to the House, which remains valid, that for a full order the savings would be at least £300 million and that for a smaller order they would be proportionately and absolutely greater.

Mr. Hamilton: Can my right hon. Friend say whether there has been any

escalation since the option was announced in the costs of the F111A? Does he accept the principle, enunciated by the Leader of the Opposition yesterday, that we should allow the costs of defence to escalate irrespective of our capacity to pay? Has my right hon. Friend entered into consultation with the French to see whether we can buy a French rather than an American replacement for the TSR2?

Mr. Healey: I am assured that the development of the F111A is going according to plan as regards both costs and performance. I can assure my hon. Friend that the Government have every intention of trimming our defence costs according to our economic cloth and, above all, to get better value for money in defence. We are, of course, looking at every possible replacement for the Canberra, but we shall not be able to take a decision on which is the most suitable until the defence review has made further progress and we are clearer as to the precise performance required of the replacement.

Sir J. Eden: To dispel any element of uncertainty which may exist in the minds of those who are now serving in the Royal Air Force, would the right hon. Gentleman confirm that it is his definite intention to bring into service in the near future some form of strategic strike aircraft?

Mr. Healey: I should, perhaps, first point out that many of the doubts which exist in the minds of some people who are now in the R.A.F. have been deliberately fostered by persons who are hostile to the policies and conduct of Her Majesty's Government. On the question of a long-range strike aircraft, I have no reason to doubt that the R.A.F. will require an aircraft of long-range with a strike capability.

Mr. Marten: Is it not true that the final bill for the compensation in respect of the TSR2 will not be known for about another two years? In that event, could the Minister give an assurance that at the end of the day we will be given a balance sheet to justify the figures which he gave earlier?

Mr. Healey: Yes, Sir. Her Majesty's Government have every interest in publishing the most detailed figures possible


and to reveal the inadequacies of the previous Government's programme and the superiority of our own. I therefore assure the hon. Gentleman that we will do what he asks.

Mr. Soames: Is the right hon. Gentleman aware that since we have been denied the figures of the costs of replacing the P1154 and the HS681 we are indeed glad to hear that we will be given more figures about the TSR2 and the F111? In view of the right hon. Gentleman's reply to his hon. Friend the Member for Fife, West (Mr. William Hamilton) about the defence review as a whole and his remarks about cutting our defence expenditure to meet our economic cloth, will he aver that he has every intention of ensuring that our defence forces will be able to fulfil whatever commitments are essential in the interests of this country?

Mr. Healey: Yes, Sir. I have stated on many occasions in the House that as long as I am Secretary of State for Defence I will make it my duty to see that Her Majesty's Forces have all the equipment that is necessary to them to perform the tasks allotted to them by the Government.

Mr. Goodhew: Is the right hon. Gentleman aware that while he stated that he must assess the precise performance requirement for a Canberra replacement, in fact that has already been done by the R.A.F., which asked for the TSR2? Would he say what change there has been in this precise requirement, if we are now going to have something instead of the TSR2, if at all?

Mr. Healey: The performance characteristics of an aircraft depend primarily on who is the likely enemy, what is the likely state of his defences and what are the targets to which there might be a requirement to penetrate when the aircraft is in service. This is a matter of judgment on which judgment is likely to differ from year to year under any Government, whether or not there is a change of Government. One of the major differences since the last election is that the requirement for a long-range strike aircraft for a strategic nuclear rôle is no longer accepted by Her Majesty's Government so far as the Soviet Union is concerned.

Phantom Aircraft

Mr. Goodhew: asked the Secretary of State for Defence by what date he expects the Spey-engined Phantom aircraft to be in squadron service in the Royal Air Force, and how this date compares with that estimated for the P1154 at the time of its cancellation.

Mr. Healey: I would refer the hon. Gentleman to the Answer I gave to the hon. Member for Macclesfield (Sir A. V. Harvey) on 2nd June.

Mr. Goodhew: Is the right hon. Gentleman satisfied that the Government, having stated that they would not take the P1154 because of the time-scale factor, will have this other aircraft in service at an earlier date, because this is important, apart from the cost, which also looks as if it might be doubtful?

Mr. Healey: The hon. Gentleman will be glad to know that, owing to the decision taken by Her Majesty's Government for the Phantom instead of the P1154, the R.A.F. will have a supersonic aircraft of the nature it requires fully delivered four years earlier than under the former Government's programme.

North Sea Drilling Sites

Mr. Hector Hughes: asked the Secretary of State for Defence if he will give details of the steps which are being taken to safeguard defence interests in regard to the sites at present being used for drilling in the North Sea.

Mr. Healey: In accordance with an established procedure for consultation made with my right hon. Friend the Minister of Power, the Ministry of Defence was consulted at an early stage about proposals to drill at the sites at present being used in the North Sea. No other special steps to safeguard defence interests are considered necessary.

Mr. Hughes: Does not my right hon. Friend realise that these sites are, in fact, islands based upon a shallow shelf in the North Sea and could therefore, in this scientific age, be used for radio, television, or perhaps even nuclear, purposes adverse to Britain in time of war? What protection has Britain against these dangerous circumstances?

Mr. Healey: While I recognise that it is conceivable, on certain hypotheses, that some of these installations might be used by an unfriendly Power with hostile intent, there is no reason to believe at present that their use in this capacity is so intended. However, we are keeping a close watch on the matter, and if we find that any action is required we will take it.

Naval Personnel

Mr. Rose: asked the Secretary of State for Defence what is the number of naval personnel under the age of 18 years; and for what period these have enlisted.

The Minister of Defence for the Royal Navy (Mr. Christopher Mayhew): At 31st March, 9,826 naval and marine officers and men; 9,013 were on 9-year engagements, and 790 were on 12-year engagements, both starting at 18. Fifteen were training for permanent commissions and eight for short service commissions.

Mr. Rose: Would my hon. Friend review the system whereby boys of 18 are signed on for a period of 12 years? Would he consider introducing an option at the end of three years, by which time these boys will have been sufficiently experienced fully to consider the matter? Will he also bear in mind the comment of one of my constituents who, in writing to me, refers to being "sold into military slavery"?

Mr. Mayhew: I obviously could not for a moment accept the phrase just quoted by my hon. Friend. I think that the break of three years which he suggests would be quite impracticable. However, on the general point of allowing very young men joining the Service to have some chance of opting out, perhaps in the early stages, there might be a case for this, and I am looking into it.

Captain Litchfield: Is the Minister aware that several hon. and gallant Members of this House joined the Royal Navy at the age of 13 and that our experience has shown that it is a jolly good system?

Mr. Hamling: Would my hon. Friend not agree that it might be useful in cases like this for these young men to be given interesting service, particularly overseas, so that they are not extremely bored, especially when they are stationed at home?

Mr. Mayhew: That is a very good point. We are always anxious to bring in sea training as quickly as possible in a young man's career.

Dame Irene Ward: Would the hon. Gentleman also bear in mind that his hon. Friend the Member for Manchester, Blackley (Mr. Rose), who used an expression contained in a letter from a constituent, did not express the view of most of the people on Tyneside?

Hon. Members: Answer.

Dame Irene Ward: Answer, please.

Development Districts (Contracts)

Mr. Gregor Mackenzie: asked the Secretary of State for Defence what plans he has for increasing the number and value of contracts placed with firms in development districts.

Mr. Healey: My Department is fully aware of the need to stimulate production in development districts and to make the maximum use of their labour and capacity. We follow the same procedure as other Government Departments in allowing some preference to such firms. I hope that firms in development districts will take full advantage of these arrangements and that the steps the Government are taking to assist industry in these district will enable them to win an increasing proportion of Government contracts in future.

Mr. Mackenzie: I thank my right hon. Friend for that reply. Is he aware of the disappointment that exists about the low proportion of Government contracts from the Ministry of Defence placed in development districts, particularly in Scotland? Will he have a look at the Government preference scheme to ensure that it may really be regarded as a preference scheme?

Mr. Healey: I know that there is anxiety in development districts about this and other matters. I assure my hon. Friend that we will do everything possible to increase the proportion of contracts which go to the development districts. However, I do not think that the House as a whole would wish the Ministry of Defence to pay a large additional premium for equipment which it could buy more cheaply in other parts of the country. As I say, I hope very much that firms in the development districts will


take advantage of the special opportunities which they are granted under Government procedures to tender not only in the first instance for contracts but also to re-quote for part of an order which is already allotted, but at a price which would not involve Departments in greater expense by having to refuse acceptance of the lowest tenders received?

Christmas Island (Nuclear Tests)

Mr. Driberg: asked the Secretary of State for Defence how many of the Service men or ex-Service men who served on Christmas Island at the time of the nuclear tests in 1957 have died or are suffering from leukaemia or other diseases that can be caused by radiation; and if he will order an investigation of this matter.

Mr. Mayhew: Seventy-two Service men have contracted leukaemia since 1957, of whom three served at Christmas Island. Each case was carefully examined, and there is no evidence to connect the illness with the nuclear tests. We keep no medical records of people who have left the Services, and I do not think that any further investigation would be useful.

Mr. Driberg: Does not my hon. Friend agree that if there are even three cases which might be attributable to this service—which he says there are not—it is a very serious matter? Can he not trace the relatively few Service men who served on Christmas Island, after they left the Service, and have their subsequent medical history investigated?

Mr. Mayhew: No, Sir. There is no evidence at all that the leukaemia of these men was connected with these tests. There is no scientific evidence of that, nor do the figures I have quoted represent even a prima facie case.

Mr. Hay: Would the Minister confirm that the matter raised by the hon. Member for Barking (Mr. Driberg) has been very exhaustively examined over the course of several years and that there is not a jot or tittle of evidence to show that any of the Service men who contracted leukaemia did so as a direct result of being involved in these tests?

Mr. Mayhew: I must say that the most exhaustive inquiries have been made and no evidence whatever has been found.

Mr. Driberg: While I am delighted to hear that the matter has been exhaustively examined, if it has—[HON. MEMBERS: "Oh."]—if it has, does that mean that there has been some examination of people who have left the Service, apparently fit, after this special service on Christmas Island? Of course, if it does not mean that, it has not been exhaustively examined.

Mr. Mayhew: Plainly, it would not be possible to keep medical records of all members of the Services after they have left the Services, but there is no evidence to suggest that if this examination were made it would produce any evidence that the tests caused the leukaemia.

Military Expenditure

Mr. Frank Allaun: asked the Secretary of State for Defence how much in the £ of revenue raised by Government taxation goes on military expenditure; if he will reduce the present expenditure of £2,120 million by £200 million in the coming year, by £400 million in the subsequent year, and by £600 million in the third year; and if he will make a statement on plans made by Her Majesty's Government for reduction of arms expenditure.

Mr. Healey: Defence expenditure represents about 5s. in the £ of revenue raised by Government taxation. We are at present carrying out a full review of defence expenditure in relation to commitments. I cannot yet add to my right hon. Friend the Prime Minister's answer on this subject on 15th July.

Mr. Allaun: Does the Minister agree that the master key to nearly all our problems—including balance of payments, re-equipment, prices, housing and pensions—is the drastic cut proposed in the Question and also proposed in the Motion signed by 68 of my hon. Friends last month?

Mr. Healey: I think my hon. Friend must agree that the key to all our problems is survival on this planet, and in so far as defence expenditure is justified by its contribution towards maintaining the peace, I do not think that he or anyone else would wish to reduce it or slash it in the way proposed in the Question.

Mr. Soames: Would the Minister direct his attention to the specific figures quoted in the Question? Does it not seem to him that, with a cut of anything approaching the order proposed, it would be totally impossible even to maintain the commitments which it is in our national interest that we should protect?

Mr. Healey: On this Question, as on the other questions I have answered of this hypothetical nature, I shall not anticipate the results of the defence review.

Variable Geometry Aircraft

Sir J. Eden: asked the Secretary of State for Defence what will be the rôle in service of the Anglo-French variable geometry aircraft; and with what armament and weapons it will be equipped.

Mr. Healey: As I told the House on 17th May, it is likely that we shall have to begin to withdraw from service during the middle and late 1970s, the Buccaneer, the Lightning and the Phantom. The variable geometry aircraft is likely to be a suitable replacement for some, or possibly all of them. The armament and weapons to be carried have still to be decided.

Sir J. Eden: Can the right hon. Gentleman, then, say that it is intended that the aircraft shall have a joint Service rôle?

Mr. Healey: It will certainly have a joint Service capability, but I am not prepared at this stage to say whether it will have a joint Service rôle. It is far too early to answer such a question.

Commander Courtney: Would the Minister confirm that the variable geometry aircraft is very suitable indeed for operation from aircraft carriers?

Mr. Healey: Yes, Sir, and I suppose the House will draw its own conclusions about the interests that lie behind the hon. and gallant Member's intervention.

Mr. Hastings: Is there not a very real danger that the current American-German project for a comparable aircraft will come on the market earlier than this one, and that if that does happen any hopes of building up a European aerospace industry will be virtually lost. Will he pay attention to this aspect?

Mr. Healey: Very obviously, there is a potential competition between the proposed

German-American aircraft and the Anglo-French variable geometry aircraft. I would hope that there would be room for both if they came into existence about the same time, but I think that it is far from being the case that if the German-American project came into production the European aerospace industry would be doomed.

Mr. Soames: Will the right hon. Gentleman still do his best to interest the German Government in this particular aircraft? It may certainly be possible for it to fulfil all the requirements of the German Government as well, and this would be a great help to the European aircraft and space industries. Further, would he say whether he intends the aircraft to have a strike and reconnaissance rôle?

Mr. Healey: As I made clear when I announced the agreement signed with the French Government, we are anxious to enable other allied Governments to participate in the project, and steps are being taken to ensure that, if possible, this will be so. I cannot add to what I have previously said about the precise rôle of the aircraft.

Defence Equipment (Export Sales)

Mr. Blaker: asked the Secretary of State for Defence what steps he is taking to increase the sales of British arms overseas.

Mr. Ron Lewis: asked the Secretary of State for Defence what progress he has made in securing the services of a super salesman for the purpose of selling British military equipment overseas.

Mr. Healey: Sir Donald Stokes, the managing director of Leylands, has, with the agreement of his board, accepted an invitation extended to him by my right hon. Friend the Minister of Aviation and myself to advise us on the promotion of exports of defence equipment, and on any changes of organisation that may be necessary for this purpose. My right hon. Friend and I are most grateful to Sir Donald for so readily placing his great experience in the field of exports at our disposal, and we are convinced that the result of his work, which he has already begun, will be to enable us to


step up the sales of our defence equipment to the maximum extent.

Mr. Blaker: Will the Secretary of State say whether the appointment of Sir Donald Stokes, and the appointment of a super salesman in future, about which the Prime Minister told the House the other day, will be intended to cover the sale not only of new equipment but of equipment that has been in service with Her Majesty's Forces and which they no longer require?

Mr. Healey: Yes, Sir. There is no limit to the scope of military equipment on whose export sales Sir Donald is now concerned to advise us.

Mr. Emrys Hughes: Is the right hon. Gentleman aware that this appointment has been greeted with considerable astonishment? Has the Minister for Disarmament been consulted about it? What salary is this big business tycoon, who is, presumably, selling arms for private manufacturers, to be paid? What kind of arms are to be sold? As the Government are against the proliferation of atomic bombs, are they now to try to sell napalm bombs?

Mr. Healey: The Government as a whole, of course, agreed this appointment. I think that the whole House is concerned with the fact that, for completely compelling economic and military reasons, we are buying some of our defence equipment from abroad, and it is desirable that we should be able to recoup the foreign exchange we lose from buying equipment from abroad by selling suitable equipment to our allies. From a constituency point of view, my hon. Friend probably shares our concern in this respect.
As to salary, Sir Donald Stokes will not be paid for his services. I would point out, as I said in my original Answer, that Sir Donald is not himself acting as a super salesman but is concerned to advise us on the whole range of problems connected with the export of arms.

Dame Irene Ward: How dreadful you are!

Mr. Ridsdale: Is not one of our great difficulties in the export of arms that our competitors have an advantage because they can give credits that we cannot?

Mr. Healey: There is a very wide range of considerations affecting the matter, and Sir Donald will be concerned with all of them.

Mr. Soames: Is the right hon. Gentleman aware that we on this side of the House feel most grateful to Sir Donald Stokes for agreeing to take on this responsibility which he has been invited to take by the Government? Would the right hon. Gentleman consider putting in the Library a copy of the terms of reference given to Sir Donald Stokes? Are there any countries in the Western world which are excluded from his terms of reference?

Mr. Healey: I will consider whether it might be possible to put a copy of the terms of reference in the Library. No countries are excluded from the terms of reference.

Mr. Emrys Hughes: In view of the unsatisfactory nature of the Answer, I beg to give notice that I shall raise the matter at the earliest possible opportunity.

Defence Policy (Review)

Mr. Wall: asked the Secretary of State for Defence if he will make a statement on the progress of the Government's review of defence policy.

Mr. Healey: I would refer the hon. Gentleman to my right hon. Friend the Prime Minister's Answer on 15th July.

Mr. Wall: Does the right hon. Gentleman realise that both in the Services and in industry there is some disquiet about uncertainty for the future? Can he give some idea when the defence review is likely to be made, and will he give a commitment that the first statement on it will be made in this House?

Mr. Healey: Yes, Sir. This review, as I have said, is into every aspect of the organisation, structure and rôle of our Forces. For that reason it is likely to continue for some time. At the same time decisions will be taken at regular intervals, and will be communicated to the House as they are taken, and we intend to publish White Papers on the decisions as that seems appropriate.

Mr. Shinwell: Is it the intention of my right hon. Friend to come to a final decision on the defence review and then


to submit it to the House as a fait accompli? Would it not be better to present the House with the White Paper and hear the views of hon. Members on the defence review before reaching a final decision?

Mr. Healey: I think it is a matter of constitutional fact that no final decisions can be reached without the House having a chance to pronounce on them. Certainly on all the major issues likely to arise in the defence review the House will have a chance to consider the Government's proposals before any final action is taken.

Service Pensions

Mr. Awdry: asked the Secretary of State for Defence whether he will now announce the Government's intentions with regard to the Armed Services pensions.

Mr. Kershaw: asked the Secretary of State for Defence whether, in view of the rise in prices, he will expedite his study of the problems of Service pensions; and whether he will make a statement.

Mr. Mayhew: I have nothing to add to the statement I made on the Adjournment last Wednesday.

Mr. Awdry: Will the Minister accept from me, in view of the very clear pledges on this subject given by the Labour Party in its manifesto last October, that there is a widespread feeling of frustration among retired officers throughout the land? Will he show a greater sense of urgency on this matter?

Mr. Mayhew: As for a sense of greater urgency, I noticed in the debate when I made a full statement last Wednesday that there was no member of the Opposition Front Bench present.

Mr. Kershaw: While recognising the completely unsatisfactory nature of the Minister's Answer, may I ask him to bear in mind, in trying to come to a conclusion on this matter, the possibility of making a new datum line for everyone concerned? Will he bear that in mind?

Mr. Mayhew: All these considerations have been borne in mind and we will make a statement as soon as possible.

Mr. Arthur Lewis: As both sides appear to have been committed to these proposals during and since the election, why cannot the Government do this, as they appear to be doing it in regard to the judges? Most of my hon. Friends would prefer these people to get increases rather than the judges.

Mr. Mayhew: Nothing I have said should lead my hon. Friend to suppose that we are not going to help these pensioners. [HON. MEMBERS: "When?"] I hope and believe that he will give these pensioners a great deal more support in any measures we have to help them than he has given in the case of the judges.

Sir T. Beamish: As the Minister knows, very positive promises of parity for all Service pensioners were made by the Prime Minister, the Colonial Secretary and the hon. and learned Member for Northampton (Mr. Paget) before the election. Will he say whether those promises have now been turned down, or does he stand by them?

Mr. Mayhew: The hon. Member is quite mistaken. If he had taken the trouble to attend the debate last week he would have heard a full statement on these things. The Government are bound by the pledges they gave in their election programme and stand by them.

Mr. Soames: Will the hon. Gentleman bear in mind the grave sense of disillusion in the country in view of the promises made before and during the election by the party opposite and the fact that the position has greatly worsened since then by a considerable rise in the cost of living?

Mr. Mayhew: The right hon. Gentleman had plenty of opportunity of tackling this problem when he was in Government. Since he went into Opposition, if he wishes to help pensioners, he could at least be in his place when their case is debated.

N.A.T.O.

Mr. Bence: asked the Secretary of State for Defence if he will make a statement on the future rôle of the North Atlantic Treaty Organisation.

Mr. Healey: I have nothing to add to the Answer which the Prime Minister gave to my hon. Friend on 13th May.

Mr. Bence: When considering economies in our defence expenditure, will my right hon. Friend please do what he can to see if in this alliance, an important one which most people in the country support, some economies can be made?

Mr. Healey: Yes, Sir. Her Majesty's Government regard the N.A.T.O. Alliance as the foundation of this country's security and the firmest guarantee of our survival in the atomic age, but, as I have said, we hope to distribute the burden more fairly, bearing in mind the many burdens which Britain is carrying alone outside the N.A.T.O. area.

Sir J. Langford-Holt: Is the right hon. Gentleman aware that the Prime Minister lent his name to a poster with a photograph which said, "No matter what they call it, no N.A.T.O. nuclear force"? Is that still the policy of Her Majesty's Government?

Mr. Healey: I think the hon. Gentleman is confusing a poster issued by the Campaign for Nuclear Disarmament with an election poster which stated the promises the Labour Party has carried out since it took office.

Military Equipment (British Manufacture)

Mr. Bence: asked the Secretary of State for Defence what proportion of military equipment is of British manufacture.

Mr. Healey: This information cannot be provided in the form requested, but I can say that rather more than 90 per cent. by value of current purchases is of British manufacture.

Mr. Bence: Would not my right hon. Friend agree that it would be far better to get agreement among all those nations in the Alliance with Great Britain to withdraw the supply of armaments provision rather than to start off an international competitive race in the sale of armaments? Would he accept from me that many of us on this side of the House and many in the country think it a retrograde step to organise a professional sales service indiscriminately to sell arms?

Mr. Healey: I think my hon. Friend will recognise that it is Her Majesty's Government's hope that we can end this whole business of traffic in arms by reaching disarmament agreements with our political opponents. Meanwhile, it is an unsatisfactory arrangement that we should engage in commercial competition with our political friends to sell arms for defence. I think he will agree that when hard selling methods are used by some allies to pre-empt a market which should be fairly shared, Her Majesty's Government have not only the right but the duty to ensure that British industry shall get a fair share of the available market.

Sir A. V. Harvey: Will the right hon. Gentleman put first things first? When he proposes spending hundreds of millions of British taxpayers' money on United States aircraft, will he ensure that they buy some British equipment in return?

Mr. Healey: Yes, indeed, but I point out that during the financial year 1964–65 British exports of arms were three times as great as British imports of arms.

Hospital, Catterick Camp

Mr. Kitson: asked the Secretary of State for Defence what steps are being taken by Her Majesty's Government for consideration of schemes to reorganise, improve, extend or rebuild the military hospital at Catterick Camp.

The Under-Secretary of State for the Army (Mr. G. W. Reynolds): I am not yet able to add to the reply my right hon. Friend gave the hon. Member on 26th May.

Mr. Kitson: Before any decision is taken to rebuild Catterick Hospital, will the Department have consultations with the Ministry of Health to see if in military hospitals some provision can be made for civilian patients?

Mr. Reynolds: Consultation with the Ministry of Health and all local hospitals is going on at present.

Malaysia

Mr. Wall: asked the Secretary of State for Defence if he will make a statement on the security situation in Malaysia in so far as British troops are concerned.

Mr. Healey: Our forces, together with Australian and New Zealand units, continue strongly to support the Malaysian forces in resisting Indonesian confrontation tactics. They have been remarkably successful lately in intercepting numerous raiding parties which the Indonesians have launched, usually at night, against Malaya and Singapore. Most Indonesian patrols venturing across the frontier in Borneo have also been driven back with losses. I regret that our own units have suffered a number of casualties in these sea and land operations.

Mr. Wall: I pay tribute to the success of our forces in Malaysia. Does the right hon. Gentleman consider that there are now enough British troops in that area? What effect is there on the Strategic Reserve from having to maintain large numbers of troops in South-East Asia?

Mr. Healey: I think that the best proof that we have enough forces in Malaysia at the present time is that we have succeeded in deterring large-scale conflict. The extraordinary fact, which I should like the House to note, is that, although we now have over 50,000 men in the Malaysian territories altogether, fewer than 50 men have been killed in actual fighting in the last two years, whereas the Indonesian casualties since they have been on the attack have been very substantially higher. These operations have had a serious effect on the available forces of the Strategic Reserve in this country. That is why on more than one occasion we have been obliged to ask our N.A.T.O. allies for permission, which they have readily granted, to withdraw units from Germany to meet the need in the Far East.

Mr. A. Henderson: Is there any evidence of continued Indonesian build-up such as the deployment of regular forces and the establishment of supply dumps, indicating that the Indonesian Government may be ready for action on a greater scale than has taken place up to date?

Mr. Healey: My right hon. and learned Friend will know that there has been a substantial reinforcement in South Kalimantan of Indonesian regular forces over the last six months. This is one of the reasons why we have been obliged to reinforce our own forces in North Borneo, though on a very much smaller

scale. All the indications are that the steps we have taken have been successful in deterring any possible Indonesian attempt to launch a large scale attack, though we are permanently on our guard against such an eventuality.

The Earl of Dalkeith: Are Hovercraft being successful? If they are, have we a sufficient number of them?

Mr. Healey: Without notice of that question, all I can say is that we have had, as the noble Lord will know, a Hovercraft evaluation team using Hovercraft in various operational conditions in Malaysia, but so far as I know—I shall correct this in writing at a later stage if I have this wrong—we have not actually used Hovercraft operationally in fighting so far. We are extremely interested in this development and are pursuing it with all vigour.

Mr. Soames: Would not the Secretary of State agree that the figures he has quoted are in themselves a great tribute to the efficiency, training and equipment of our forces in Malaysia?

Mr. Healey: Yes; that is so. I am sure that the whole House would wish to join me in paying tribute to the enthusiasm and skill which our forces have shown in extremely trying operational circumstances.

Hong Kong Garrison

Mr. Jackson: asked the Secretary of State for Defence what economies he proposes to make in the cost of maintaining the Hong Kong garrison in the furtherance of the defence review.

Mr. Healey: We are examining all our overseas commitments during the defence review, but I cannot yet make any statement about the Hong Kong garrison.

Mr. Jackson: Will my right hon. Friend bear in mind, when he is conducting this review, the danger of the Hong Kong garrison becoming too large in relation to the trip-wire theory, whereas it can never be large enough to deal with any major land onslaught?

Mr. Healey: My hon. Friend can be assured that I have this very much in mind.

Mr. Allason: Since the highest rate of Income Tax in Hong Kong is 2s. 6d. in the £, would the Secretary of State convey to his right hon. Friend the Secretary of State for the Colonies that it might be a good idea for the Hong Kong Government to cut their budget cloth according to their defence commitments?

Mr. Healey: I am far from indifferent to the consideration which the hon. Gentleman has put forward, but it is only fair to point out that the Hong Kong Government are contributing £1½ million a year towards the cost of our forces and have agreed to pay up to a further £6 million for Army and R.A.F. works projects in the Colony spread over six years. These contributions are appreciated.

South-East Asia

Mr. Jackson: asked the Secretary of State for Defence what steps he is taking to develop the westward defence route to South-East Asia.

Mr. Healey: The R.A.F. already occasionally makes flights to and from the Far East across the longer North American route. We are currently considering what arrangements might be necessary to enable us, with the agreement of the United States and Canadian Governments, to make greater use of such routes, if need be, in the future.

H.M.S. "Sea Eagle"

Mr. Chichester-Clark: asked the Secretary of State for Defence when he expects to announce the results of his defence review, and in particular the decision on H.M.S. "Sea Eagle".

Mr. Healey: I cannot yet add to what was said on 15th July by my right hon. Friend the Prime Minister in answer to questions about the defence review generally, but I do expect a decision on H.M.S. "Sea Eagle" to be announced shortly.

Mr. Chichester-Clark: Can we be told whether any of the decisions in this review will be announced before the House rises? If not, can we have an absolute assurance that no important decisions in this review will be announced while the House is in recess? Is the Secretary

of State aware that the suggestion of the right hon. Member for Easington (Mr. Shinwell) concerning a White Paper is one which commends itself to many members on this side of the House?

Mr. Healey: I am aware that there is some interest in that suggestion. On the question of the announcing of decisions, I cannot undertake not to take or announce a decision while the House is in recess, but so far as possible I will take any pending decisions in time to announce them to the House before it rises.

Mr. Chichester-Clark: Is a decision on this question likely to be taken before the coming recess?

Mr. Healey: I cannot give a firm assurance one way or the other on that at the moment.

Commander Courtney: Will the Secretary of State give the House an assurance that in this rather complicated matter he will give absolute priority to the technical requirements of antisubmarine defence, which is the purpose of H.M.S. "Sea Eagle"?

Mr. Healey: Certainly the major considerations in the Government's mind are the operational advantages of the particular location of the anti-submarine training school. That will always have first priority. However, I do not think that on reflection the hon. and gallant Gentleman will want to give it an absolute priority and to ignore completely all other considerations.

Mr. Hay: Is the Secretary of State aware that there is a certain amount of disquiet, not only in Northern Ireland but elsewhere, about the whole question of the future of H.M.S. "Sea Eagle"? Would he give the House an undertaking that, if he proposes to come to a decision to close down H.M.S. "Sea Eagle", he will take the opportunity before the recess of announcing it in the House and give us the necessary opportunity to discuss or debate the matter?

Mr. Healey: Of course if it is possible to communicate a decision to the House before the recess I will do so, but I cannot hold up action which the Government have decided is in the national interest for three months if a decision


is not possible until after the House has risen. I do not think the House as a whole would wish me to.

Mr. Chichester-Clark: In view of the unsatisfactory nature of the reply, I beg to give notice that I shall raise this matter on the Adjournment as quickly as possible.

Married Quarters

Sir B. Janner: asked the Secretary of State for Defence whether he is aware that married men who are under the age of twenty-one are not permitted to have married quarters while serving with the Army in Malta, nor are they permitted grants for free travel for their wives and families to join them; and if he will issue orders that this age discrimination should be discontinued, and that married men of any age should be entitled to apply for married quarters.

Mr. Mulley: Married officers under the age of 25, and soldiers under 21, receive marriage allowance, but are not entitled to quarters or the other family benefits of older men. This applies to all three Services, at home and overseas. We are not able to relax the age limits.

Sir B. Janner: The fact that it applies to three Services does not make it any the less heinous in respect of one. Is my right hon. Friend aware that young married people under 21 are allowed to take their wives but they must pay their fares? They are not given quarters. They are treated shamefuly in this respect. Will not my right hon. Friend reconsider this matter and make no distinction between persons who are under 21 and those who are over 21, particularly if they have families?

Mr. Mulley: We are aware that the average age of marrying has been greatly reduced, and this will naturally apply to servicemen as to civilians. The ages have been reduced from 30 to 25 for officers and from 26 to 21 for soldiers. Changing the age for their entitlement would not provide them with quarters. I do not think that my hon. and learned Friend appreciates that there is world wide an inadequate number of quarters for all three Services, and in every station a number of people who are already entitled and who are over 21 are not able

to get quarters. Merely changing the age, as my hon. Friend suggests, would not provide the quarters we need.

Personal Case

Mr. Arthur Lewis: asked the Secretary of State for Defence why the constituent of the hon. Member for West Ham, North, serving in Chatham Barracks, details of whom have been supplied to the Admiralty, has been refused permission to buy himself out of the Royal Navy on the grounds of shortage of manpower, whilst serving-men in this barracks are being given occupations, such as picking up paper, doing private house work, mowing the lawn and other work normally undertaken by private servants; and whether he will cause an investigation to be made into these complaints.

The Under-Secretary of State for the Royal Navy (Mr. J. P. W. Mallalieu): This rating completed his last draft in May. He was due for embarkation leave and posting to the Far East by August. There was, therefore, no point in sending him to a complement billet. Hence his temporary posting to the Fleet Maintenance Unit at Chatham, his preference area. During a short and unusual lull in ships' maintenance work, he was employed on keeping Navy Department property ship-shape. The fact remains, however, that the Navy still has a pressing need for his skilled services. He will be fully employed in his proper category as soon as he joins his new ship.

Mr. Lewis: Is it not a ludicrous situation when a man who applies for his discharge is told that he is too busy to be discharged and yet is spending his time, as my hon. Friend rightly guessed, mowing the captain's lawn and acting as wet nurse to the captain's family? [Laughter.] Yes. Hon. Members laugh, but I mean looking after the family, looking after the kiddies and acting as the equivalent of a wet nurse. [Laughter.] All but in fact. Is it not a terrible situation that we have this sort of thing going on? [HON. MEMBERS: "A nanny."] Yes, a nanny. That is the same thing. Is it not better that this man should come out and get on to some useful work rather than doing these officers' work and work which their wives should be doing?

Mr. Mallalieu: My hon. Friend's constituent is obviously a man of many parts, but I can assure him that his proper skill will be fully used very shortly.

Mr. Hay: Despite the versatility of the hon. Member's constituent to which the Under-Secretary has rightly referred, would the Under-Secretary deprecate the use of the expression "serving-men" in this Question for "sailors"?

Mr. Mallalieu: Yes, indeed.

SOUTH ARABIAN CONSTITUTIONAL COMMISSION

Mr. J. Amery: (by Private Notice) asked the Secretary of State for the Colonies if he will make a statement about the withdrawal of the Sudanese delegate from the South Arabian Constitutional Commission and the cancellation of the Commission's departure for Aden.

The Secretary of State for the Colonies (Mr. Anthony Greenwood): On Monday, 19th July, I was informed by Sayyid Mohammed Abu Rannat that he had been asked by the Sudanese Government to withdraw from the South Arabian Constitutional Commission and that he considered he had no alternative but to comply.
I am in urgent consultation with the High Commissioner about the steps which should now be taken. Meanwhile, the Commission has postponed its departure for South Arabia for the time being.

Mr. Amery: Is the right hon. Gentleman aware that we on this side of the House have consistently advised him not to persist in this ill-conceived initiative and that if he had followed our advice he and the Government would have been saved another humiliating rebuff? Can he now say what representations have been received by the High Commission or himself from the Federal Government and the Aden Government since the withdrawal of the Sudanese member from the Commission?

Mr. Greenwood: The right hon. Gentleman calls this an ill-conceived initiative, but it was a genuine attempt to ease tension and end bloodshed and I am sorry that I did not receive the co-operation

of either the Aden Government or the right hon. Gentleman in that perfectly legitimate endeavour. I have received suggestions from Federal Ministers which have reached me through the High Commissioner. I am in touch with the High Commissioner about them, but I prefer not to add anything at this stage.

Mr. Amery: What about the Aden Government?

Mr. Greenwood: I have not heard from the Aden Government at this stage.

Mr. Sandys: Does not the right hon. Gentleman remember that when I was in Aden I advised all concerned to receive this Commission and to co-operate with the Government, although it was well known that I disagreed with that policy? I have been as helpful as I could. Will the right hon. Gentleman now give up this futile attempt to shelter behind an international Commission which has no authority, and which only serves to blur responsibility, and now resume what is his own task, which is to undertake whatever consultations are necessary and to take decisions on the responsibility of Her Majesty's Government?

Mr. Greenwood: When I used the expression "right hon. Gentleman", it was in the singular and not the plural. I exempt the right hon. Member for Streatham (Mr. Sandys) from the strictures which I just passed on his right hon. Friend the Member for Preston, North (Mr. J. Amery). I appreciate what the right hon. Member for Streatham (Mr. Sandys) did when he was in Aden. It is too early at this stage to talk about abandoning the Commission. I am in consultation with the High Commissioner and I do not think that it would be useful to debate the matter further at this stage.

AIRCRAFT ACCIDENT, LIVERPOOL

Mr. Heffer: (by Private Notice) asked the Minister of Aviation if he will make a statement about the air crash in the proximity of Speke Airport, Liverpool, yesterday and would he institute an inquiry into the matter.

The Minister of Aviation (Mr. Roy Jenkins): Yes, Sir. A Viscount belonging to Cambrian Airways, flying from the Isle of Man, crashed into a factory near Liverpool Airport yesterday evening at 6.18 while approaching the aerodrome.
No passengers were being carried, but two women working in the factory were killed, as were the two crew.
I am sure that the House will wish to offer their condolences to the families of those who lost their lives.
A team from my Accidents Investigation Branch arrived in Liverpool early this morning and is conducting a full investigation.

Mr. Heffer: May I add my sympathy and that of all hon. Members to that already expressed with the relatives of those who lost their lives? Would my right hon. Friend ensure that the inquiry takes note of the safety of people employed in factories surrounding the airport and those living in its vicinity? Is it not important, in view of the proposed extensions at the airport, to see that any defects are eliminated at this stage before the build-up of the airport takes place?

Mr. Jenkins: I will certainly consider that when I receive the report of the inquiry. The factory into which the plane crashed is 1,100 ft. from the extended centre line of the runway, but that will not exclude taking into account safety considerations relating to that and other buildings.

Mr. Tilney: In the enforced absence of my hon. and learned Friend the Member for Liverpool, Garston (Mr. Bingham), in whose constituency this regrettable accident took place and one of whose constituents perished, may I, on behalf of all those in Garston and Wavertree and the whole of Liverpool and this side of the House, express sympathy with those who are bereaved?
May I ask the right hon. Gentleman whether the weather conditions were such that it was difficult to approach the airport? Was the factory chimney, which, I understand, might have been touched by the wing of the aeroplane, lighted up, and, if not, can action be taken so to light it up, as is done in experiments taking place in Glamorgan? Will the

right hon. Gentleman see that in bad weather conditions it is lighted up?

Mr. Jenkins: As the hon. Gentleman will appreciate, these are matters to be taken into account in the investigation and I would not wish to prejudge them. The information at the moment is that it was the factory roof and not the chimney which the aircraft hit, that the aircraft dived and then hit the factory rather than that it hit something and then dived.

Mr. Marten: May I add my sympathy to that expressed with those who have been bereaved and ask the right hon. Gentleman whether there is any possibility of providing an interim report on this accident? Accident reports sometimes take a very long time—they are very carefully prepared. Might it not be possible to have an interim report to satisfy public opinion while the final technicalities go on over the months after that?

Mr. Jenkins: I will certainly consider that. It has also to be considered, in all these cases when an interim report is received, whether a public inquiry is desirable.

DEFENCE (RATIONALISATION OF SERVICE FUNCTIONS)

The Secretary of State for Defence (Mr. Denis Healey): With the permission of the House, I should like to make a statement on the progress made in rationalising Service functions.
I have decided to introduce new schemes in two separate fields of activity. The first scheme relates to the organisation of the intelligence staffs in the Ministry of Defence, while the other results from the study of centralised responsibility for motor transport in the three Services which was mentioned in this year's Statement on Defence Estimates.
The intelligence staffs of the former Service Departments were merged in a single defence intelligence staff with effect from 1st April, 1964. In the light of experience since then, I have decided to take a further step in reorganisation by substituting two functional Directors—a Director of Service Intelligence and a Director of Management and Support of


Intelligence—for the present Director of Naval Intelligence, Director of Military Intelligence and Assistant Chief of the Air Staff (Intelligence).
I believe that this change will improve our ability to deploy our defence intelligence effort with the maximum flexibility and effect, and that it will open the door to economies, including the immediate cut of one two-star post, over and above the substantial saving which has resulted from the original merger.
On motor transport, I have accepted an outline plan under which the Army Department will assume responsibility for the development and procurement of all mechanical transport and spares for the three Services, except for a few specialist vehicles which are the responsibility of the Ministry of Aviation. The Army Department will also assume responsibility for the distribution of Service vehicles, for central storage and the repair of vehicles, assemblies and spares above unit or formation level. The three Services are now collaborating on the preparation of detailed plans and revised procedures, and the changes in organisation and responsibilities will start to take effect from 1st April, 1966.
It is not possible to be precise about the financial effects of these changes, but I would expect to save about £500,000 a year at the start, and to make additional savings when the full scheme is in operation.

Mr. Soames: Both these changes seem to us to be a natural extension of the rationalisation of our defence forces, which is, of course, agreed in principle on both sides of the House and which was started by the previous Government.
Where the intelligence services are concerned, may we have the Minister's assurance that this will not in any way lead to a reduction in our intelligence effort, which is vital in so many areas in which our defence forces are engaged, and to which, indeed, it may well be necessary to add?
Where transport is concerned, am I right in understanding that first and second line repairs will still be left with the units or formations of the Services concerned, and that it will be only third line repairs, very major repairs, which

will be taken over by this joint organisation?

Mr. Healey: I am grateful to the right hon. Gentleman for his support. There will be no reduction in our intelligence effort. Indeed, I am convinced that the reorganisation will make possible a better use of our available resources.
The right hon. Gentleman is broadly right in the distinction he made in his second question.

Captain Litchfield: The right hon. Gentleman will be aware that a good deal of Service intelligence is technical in the professional sense. Can he say who will be responsible ultimately for each Service branch of intelligence?

Mr. Healey: For reasons which the hon. and gallant Gentleman will understand, I cannot go deeply into detail on this, but I can assure him that the technical branches of intelligence will continue to be collected as now and evaluated by technical experts from the Service directly concerned.

Mr. Emrys Hughes: First, what is the original amount which has been cut? Secondly, as my right hon. Friend is co-ordinating military, naval and air intelligence, does not he think that he should take over M.I.5, which involves enormous expenditure at the present time?

Mr. Healey: My hon. Friend must address his last question to someone other than myself. I am not in a position to answer his first question about the total volume of resources.

Commander Courtney: Can the right hon. Gentleman confirm that the office of Director of Naval Intelligence will no longer exist as a result of this reorganisation, and, if so, can he name a naval officer who will be responsible to the Chief of Naval Staff for the technical intelligence referred to by my hon. and gallant Friend the Member for Chelsea (Capt. Litchfield)?

Mr. Healey: As I said, the Director of Naval Intelligence, like the heads of the other Service intelligence organisations, will cease to exist. But suitable arrangements will be made within the new organisation to preserve close links between the individual Chiefs of Staff and the appropriate Service experts at the level of


Deputy Director and below, working under the overall control of the Director-General of Intelligence, the Deputy Chief of Defence Staff (Intelligence) and the new functional directors.

OIL AND GAS (CONTINENTAL SHELF)

The Minister of Power (Mr. Frederick Lee): With your permission, Mr. Speaker, and that of the House, I wish to make a statement.
I hope to be in a position early next month to invite applications for further production licences to search for and get oil or gas on the Continental Shelf.
The territory on offer will include blocks which were offered on the last round, but were not taken up, and certain areas which have recently become available in territorial waters. In addition, subject to the approval by Her Majesty of an Order-in-Council designating additional parts of the Continental Shelf, I hope to offer further blocks in a strip between the edge of the present designated area in the North Sea and the boundary with the Norwegian, Danish and Dutch parts of the shelf; in an area about 10 to 20 miles wide around the South Coast from Dover to Teignmouth; in the Eastern half of the Irish Sea; and in an area extending round the Orkneys and Shetlands.
I will arrange for a map to be placed in the Library showing the areas within which blocks will be offered.
The royalties and other financial terms applicable to licences will be unchanged.
I turn now to the considerations I shall have in mind in awarding licences. In the Government's view, the overriding objective is to secure the most thorough and rapid exploration and development of the oil and gas resources of the Continental Shelf in the national interest. I shall, therefore, consider all applications which can contribute to this end; and shall pay particular attention to the programme of work proposed and the capacity of the applicant to carry it out. I shall also take into account any exploration work already done by or on behalf of the applicant which is relevant to the areas applied for, and his facilities for disposing, in this country, of any oil or gas won.
As required by the regulations, all applicants must be citizens of the United Kingdom and Colonies resident in this country or bodies corporate incorporated in the United Kingdom, and the profits of the operations will be taxable here. Where the applicant is a foreign-owned concern, I shall look at the extent to which British companies receive equitable treatment in that country. Other things being equal, however, I intend to give weight to the contribution which the applicant has made or is planning to make to our economic prosperity, including the strengthening of the United Kingdom balance of payments and the growth of industry and employment in this country, with particular reference to regional considerations.
I shall also take into account any proposals which may be made for facilitating participation by public enterprise in the development and exploitation of the resources of the Continental Shelf.

Mr. Peyton: Is the right hon. Gentleman aware how welcome this statement is, and will he accept that the Opposition wish to congratulate him on the very close way in which he has followed the line taken by the previous Administration? Does he recall the words used by the right hon. Gentleman the First Secretary of State towards the end of last year, in which he accused the Conservative Government of dishing out taxpayers' property to their private enterprise friends? Will the right hon. Gentleman be good enough to convey the sympathies of the Opposition to his right hon. Friend the First Secretary of State whose face must be exceedingly red at this moment?

Mr. Lee: It is a pity that, at eleven minutes to four this afternoon, the hon. Gentleman's thinking on this is no better than it was at one o'clock this morning. In fact, my party welcomed wholeheartedly the Bill which was introduced by the Conservative Government.
On the Second Reading of the Bill, my right hon. Friend the Minister of Transport said:
I congratulate the Minister on bringing forward the Bill, because we on this side of the House appreciate its urgency. I think that we might well have had it a little earlier".
A little later he said:
I congratulate the right hon. Gentleman also, on having introduced a Bill which so


extends public ownership without, so far, a murmur of protest from any corner of the House. I shall be interested to know whether any hon. Member opposite intends to protest at the Minister's efforts as one of the great nationalisers".—[OFFICIAL REPORT, 28th January, 1964; Vol. 688, c. 224–5.]
The statement which I have made goes much further than the statement of my predecessor, but I think that he forgot to mention participation by the nationalised industries.

Mr. Grimond: Can the Minister tell us a little more about what is meant by the phrase in his last but one sentence,
with particular reference to regional considerations"?
Does that mean that he expects some employment to be given in the regions concerned? Could he also tell us whether he has reason to suppose that these licences will in fact be taken up?

Mr. Lee: A real increase in employment in shipyards is now going on as a result of building the rigs, which is employment worth many millions of pounds. It so happens that it is largely in the development districts and is of great importance to those particular areas. I have forgotten the right hon. Gentleman's second point.

Mr. Grimond: Does the Minister expect the licences to be taken up?

Mr. Lee: Yes, Sir. There is now a little competition for them. Other countries with areas bordering on the North Sea are also putting forward requests for applications, and that is one of the reasons why we are doing so at this time.

Mr. Hector Hughes: Is the Minister aware that since drilling started in the North Sea there have been complaints of a diminution of the fishing potentialities? Will he say what steps he takes, under the licences he grants to drillers, to protect fish and the fishing interests from that diminution? Secondly, as these sites are islands, as the Minister has said, based upon the shelf of the North Sea, what steps is he taking to protect Britain from adverse use of those islands by means of radio or television or in the event of war?

Mr. Lee: Quite apart from the granting of licences, consent is required before any area can actually be drilled. We

do that to safeguard the activities of the fishing industry and interested parties of that sort.

Lady Tweedsmuir: Would the Minister say whether one of the criteria that he will take into account in granting further licences will be that the work in connection with drilling rigs or any shore installations must be in development districts, notably the North-East and the City of Aberdeen? Secondly, would he also give a progress report on the exploration to date and tell us how far it has been successful?

Mr. Lee: As I said to the right hon. Member for Orkney and Shetland (Mr. Grimond) just now, we are very keen to get a greater allocation of orders for rigs, and so on, in the development districts especially. I have in mind the North-East and areas of that type. To date, I think that there three wells have been drilled and that three are in the course of drilling. So far, I have nothing to report about what has been found.

Colonel Lancaster: Is the right hon. Gentleman aware that during the passage of the Continental Shelf Bill his right hon. Friend the Minister of Transport criticised very strongly the proposals of the Conservative Government for the allocation of licences? What has happened in the thinking of the Ministry now to reverse that view and to adopt the procedure which the Conservative Government on that occasion put forward as the suitable one?

Mr. Lee: As I said in answer to the hon. Member for Yeovil (Mr. Peyton), we want to sub-divide this. My right hon. Friend the Minister of Transport wholeheartedly welcomed the Bill itself as a very worth-while and healthy extension of nationalisation.
During the course of the election campaign, when the previous Government, which had been nearly dead for two years was undoubtedly a dead duck, they rather jumped the gun by issuing licences. I endorse everything my right hon. Friend the First Secretary and my right hon. Friend the Minister of Transport said.

Mr. Dalyell: Hon. Members who served on the Committee stage of the Continental Shelf Bill will welcome my right hon. Friend's statement of good


will. But in the light of his previous statement in relation to the Coal Board running down in areas where there are problems in the extractive industry, could he take positive steps to suggest to the Board that it might take an interest along these lines?

Mr. Lee: I cannot go into detail. I assure my hon. Friend that the Coal Board is well aware of the developments that are taking place.

Mr. Hugh D. Brown: Is there anything in the existing agreement on the issuing of licences that obliges an unlucky prospector to make the information that he has already obtained available to a competitor? It seems to me to be highly desirable in the national interest that this information should be made available.

Mr. Lee: I think that all information of that type must be made available to the Minister concerned, anyway, which does mean that the nation will be kept informed about it.

Dame Irene Ward: On a point of order. In view of the fact that my constituency was mentioned, and that both the hon. and learned Member for Aberdeen, North (Mr. Hector Hughes) and my hon. Friend the Member for Aberdeen, South (Lady Tweedsmuir) have asked supplementary questions, is it not odd that my constituency is not allowed to have a look in, Mr. Speaker?

Mr. Speaker: I share the hon. Lady's distress on all occasions. There is nothing odd about it. We have to bear in mind that we are invading private Members' time.

Dame Irene Ward: On a point of order. [Interruption.] It is very unfair. [Interruption.]

Mr. Speaker: Order. It is difficult for me to hear the hon. Lady.

Dame Irene Ward: I will try again. I am asking whether it is not rather unusual, when my constituency is one of the key constituencies mentioned for this new development, that my part of the country is not allowed to have a single question put in relation to this very important part of the North-East Coast. I have had to rely on the right hon. Gentleman the Member for Orkney and Shetland (Mr. Grimond) and my hon. Friend the Member

for Aberdeen, South to ask about my constituency? It is not fair.

Mr. Speaker: I wish that I could say it was not unusual. Hardly ever a day passes that I bring these discussions to an end when I think that I have to—

Dame Irene Ward: Too many Scots—

Mr. Speaker: —do my best to be fair to everyone without vigorous protest from some quarter or another. I have to be hard-hearted about that.

Mr. Thorpe: On a further point of order. Is it not a fact that the reference was not to Tynemouth, but to Teignmouth?

Dame Irene Ward: No.

Mr. Speaker: I would beg the House not to be unduly frivolous about this. We are consuming private Members' time, which is limited to seven o'clock.

AGRICULTURE (HAY AND CEREAL CROPS)

Mr. Farr: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a definite matter of urgent public importance, namely,
the partial failure of the nation's hay and cereal crops and the effects thereof.
The House will not doubt that this is a matter of the greatest urgency. The ferocity of the tropical thunderstorms of the last 36 hours, coupled with the large downpours of hailstones in various areas, have almost converted some districts into disaster areas. Similarly, a matter of the greatest public concern must be that, apart from the threat to the livelihoods of all those affected, even a partial failure of this year's harvest, with the consequent necessity to increase our imports of temperate foodstuffs, would aggravate the balance of payments problem and plunge us into a severe financial crisis this autumn.
I submit, also, that this is a very definite situation, demanding the attention of the House. All over the country hay lies uncut, or, where cut, in black and rotting rows. Before the events of the past two days, large areas of cornland had been laid flat and, as can be


imagined, as a result of the pounding by yesterday's hail and the inch of rain which fell in 45 minutes, the situation has become almost disastrous.
I have here a quotation headed, "Harvest in jeopardy after big storm", in a Midlands evening newspaper, which, I think, is singularly appropriate.

Mr. Speaker: The hon. Gentleman will remember that he cannot make now the speech he would be able to make were his application to be granted. I only have matters of time in mind.

Mr. Farr: I am perfectly aware of that, Mr. Speaker. I proposed to read only this very short extract from the newspaper which is typical of many which have come to hand from different parts of the country.
The extract, under the heading "Harvest in jeopardy after big storm", says in three or four lines:
Farmers are worried about the effect the torrential rain may have on the harvest. We are mainly worried that the flattened crops may grow into the ground. The harvest is in serious jeopardy …".
In my submission, therefore, this is a definite matter of urgent public importance.

Mr. Speaker: The hon. Gentleman asks leave to move the Adjournment of the House pursuant to Standing Order No. 9 for the purpose of discussing a definite matter of urgent public importance, namely,
the partial failure of the nation's hay and cereal crops and the effects thereof".
I cannot accede to the hon. Gentleman's application. It is not within the Standing Order.

ANCHORS AND CHAIN CABLES (NO. 2)

4.1 p.m.

Commander Anthony Courtney: I beg to move,
That leave be given to bring in a Bill to amend the law relating to the testing and supply of anchors and chain cables and to bring it up to date in substitution for the Anchors and Chain Cables Act, 1899.
The House is indebted to the hon. Member for South Shields (Mr. Blenkinsop) who, on 31st March last, introduced a bill on this broad topic. The hon. Gentleman has been courteous enough to give me notice of his enforced absence from the Chamber this afternoon.
In the opinion of many of us, not only of hon. Members on this side of the House but also of those technically qualified on the benches opposite, that a Bill of this kind, on an important technical matter, might properly have been introduced by the Government. The more we examined the question, the more it appeared to us to be purely one which had had no very strict and deep technical examination outside the Department. Furthermore, on examination, and despite certain assurances from the Minister of State, Board of Trade, we felt that there had been no proper reference to many of the bodies intimately concerned with the provisions of the Bill of the hon. Members for South Shields.
In addition, we felt that without proper warning an undue measure of responsibility had been laid, by virtue of orders to be put before the House under the negative Resolution procedure, on the masters of ships in the taking on board of untested anchors and chain cables. The more we sat—and we sat for five long weary sittings upstairs in Committee on the hon. Gentleman's Bill—the more technical considerations were produced by my hon. Friends with a certain amount of experience, gallantly aided by the hon. and gallant Member for Kingston upon Hull, East (Commander Pursey)—

Dr. Reginald Bennett: Where is he?

Commander Courtney: —who, unfortunately, is also unable to be in his place today.
We decided that we would introduce a fresh Bill, taking into consideration many of the technical points which had arisen


in discussion of the Bill of the hon. Member for South Shields.
I shall take only a few moments of the House's time to describe the nature of my proposed Bill, which, I must repeat, would be a new Bill on the subject of anchors and chain cables. It is a short, quite modest Bill of two Clauses empowering the Board of Trade to make certain orders relative to the methods of testing anchors and chain cables taken on board ships registered in this country.
First, it would made the same provision for mooring anchors and mooring cables used in moorings by harbour authorities in the United Kingdom. It would transfer the responsibility in the 1899 Act from the suppliers to the owners of ships, not to the masters, and to the harbour authorities under whose jurisdiction the moorings, anchors and cables are laid respectively.
Secondly, the Bill would bring more into line with modern needs the provisions of the 1899 Act by making allowance for registered yachts, the larger ones of which frequently use chain cables, and hover vehicles. Unlike the "progressive and dynamic" hon. Members opposite, we are looking to the future by making allowance in the Bill for hover vehicles.
Thirdly, the Bill would raise the penalties for the misuse and improper supply and taking on board, or use in the case of harbour authorities, of anchor and chain cables to a level which we believe is more consistent with modern levels of finance.
Fourthly, there is a saving Clause on the lines of the 1899 Act to deal with anchors and chain cables for all purposes tested in establishments under the jurisdiction of the Ministry of Defence. We believe that this is an important consideration.
Fifthly, as I have mentioned, the provisions of the Bill extend to mooring anchors and mooring cables. It is anomalous that responsibility for the provision

on board of a faulty chain cable rests on the owner in so far as the chain cable—the bridle—links the ship with the ring of the mooring buoy. Frequently, in our crowded harbours, ships cannot go alongside, but must go to mooring buoys. It is anomalous that nobody has been given responsibility for that part of the mooring cable which extends from the lower ring of that buoy to the mooring anchor, and nobody appears liable to suffer statutory penalties for the provision of faulty mooring anchors or mooring chains.
Finally, my hon. Friends and I and the hon. and gallant Member for Kingston upon Hull, East, do not believe that the safety of shipping and of life should depend on rules made in accordance with the negative Resolution procedure of the House of Commons. Further, we believe that Schedules should be applied to the proposed Bill, as they were applied to the 1899 Act, to make provision for the specific tensile and breaking strains of all types of modern cables.
This proposed Bill, which is short, modest and constructive, has received close technical examination from a number of people fairly well qualified to speak on these matters and has been referred to many interested parties outside the House and has gained general approval.

Question put and agreed to.

Bill ordered to be brought in by Commander Courtney, Dr. Bennett, Mr. Webster, Mr. Ian Lloyd, and Commander Pursey.

ANCHORS AND CHAIN CABLES No. 2

Bill to amend the law relating to the testing and supply of anchors and chain cables and to bring it up to date in substitution for the Anchors and Chain Cables Act, 1899, presented accordingly and read the First time; to be read a second time on Friday, 29th October, and to be printed. [Bill 196.]

POSTAL GIRO SERVICE

4.9 p.m.

Mr. H. Hynd: I beg to move,
That this House would welcome the establishment of a postal giro service in the United Kingdom offering similar facilities to those given by postal giro systems in other countries.
I should like to begin by mentioning one or two facts which, I think, are not controversial. The first is that this giro system was first introduced about 80 years ago in Austria and that now at least 44 countries, including nearly every West European country, Japan, some other Asian countries, and the former French and Belgian colonies, are enjoying this system, while in this country we have not yet agreed to take it up.
Briefly, it gives cost-free banking and credit transfer services while supplying the Exchequer with loans at either no or very low rates of interest, according to the arrangements which are made between the Post Office and the Exchequer, similar to what is done now by the Post Office Savings Bank. In that way the bank can recoup its costs and, we hope, pay its way.
This is not the time or place for me to give a technical lecture on the system, even if I were qualified to do so, but, for the record, I might mention one or two points. As the system is used abroad, anyone can open a giro account by simply paying in a deposit at any post office. The account holder gets from the Post Office free of charge a supply of cheque forms over-printed with his name and address and his account number. He gets a supply of postage-free envelopes addressed to the giro clearing house. With those two documents he can in a very simple way pay accounts, either to those who also have giro account numbers or to people who have not.
If the person to whom he is paying the account has a number, he just has to enter that number on a form and hand it into a post office, or drop it into the nearest letter box and post it postage-free, thus saving the cost of postage, of the postal order poundage, cheque charges and bank charges. If the person to whom he is paying the account does not have a giro account number, he can still send him

a postal cheque, which can be cashed at any post office, probably at a small fee. The account holder can cash one of his own postal cheques at any post office on two or three days' notice.
Furthermore—and this is very important—wages may be paid by this system, by postal cheques which can be cashed at any post office in the country. Incidentally, they can be cashed or the amount or part of the amount can be transferred to the employee's Post Office savings account or to his giro account, thus being an incentive to saving. There are many refinements, and ancillary services can be attached to this simple transfer credit system, and, in fact, are attached to it in various countries; but I do not want to go into them at the moment.
The point which I want to stress is that this is a simple system of credit transfer which can be operated through our network of 23,000 post offices throughout the country, many of them in remote parts where there is no bank, all of them open at hours when banks are closed, and, therefore, providing a very convenient service to the public which they do not have at present. Furthermore, I want to underline the fact that as used on the Continent this system has international recognition and that postal cheques issued in one country can be cashed in another country. All these giro clearing houses are linked together by Telex machine.
This question has frequently been raised in the House over the last 50 years. When it was first raised, Sir Herbert Samuel was Postmaster-General, and he rejected the idea. But it has been brought up from time to time since then. In 1928, the Post Office Advisory Council recommended that this or a system like this should be adopted for depositors in the Post Office Savings Bank, and in 1931 the Post Office introduced a system whereby withdrawals from the Savings Bank could be used to pay third parties by way of draft warrants. This is one step in the direction which I am advocating but only a very small step.
In 1959, the Royal Commission on the Working of the Monetary System, the Radcliffe Commission, recommended that the giro system should be investigated if the commercial banks in this country


did not introduce a simple transfer credit system. The banks took the hint and in 1961 they introduced a transfer credit system. As I am dealing with facts at the moment, I will express no opinion as to the effectiveness of that system.
On 4th March, 1963, well within the recollection of many of us, our late lamented friend Mr. W. R. Williams, on an Adjournment Motion, raised the matter again and received a very discouraging reply from the then Assistant Postmaster-General, whom I am glad to see with us today, His two main objections were, first, that he was not satisfied that the Post Office would obtain a profit from operating the giro system, and, secondly, that we ought to wait and see the result of that system which had been introduced by the banks in 1961.
Mr. Williams spoke at that time not only for himself and for many of us, but also for the staff of the Post Office, who have always been keen to get this system introduced. One of their Associations, the National Federation of Sub-Postmasters, has been particulary active in getting this system known and in issuing propaganda for its adoption. Post Office staff associations have been pressing for its introduction for a long time and have been continually assured that the matter is under consideration by the Government.
The last time it was discussed in the House was again in 1963, on 6th December, when, in a speech on the Post Office (Borrowing Powers) Bill, my right hon. and learned Friend the present Home Secretary received an even more discouraging response from the then Assistant Postmaster-General. But there has been one development since then—we passed the Trustee Savings Bank Act in 1964 which enables the Trustee Savings Bank to issue cheques and in that way to help to get payments made between individuals and businesses in this country without the use of cash.
I hope that the House will agree with me that up to the moment I have been purely factual and have dealt with points which are common ground to everyone in the House. Now perhaps I may be a little more controversial, because I suggest that these tentative steps which have been taken by the Post Office Savings Bank, by the commercial banks and by

the Trustee savings bank are in the right direction but are not enough.
The first time that I came into contact with the system was when I was visiting a friend in Belgium, some years ago, and saw him paying an account in this way. I asked him what he was doing, and he explained the system to me. I then expressed some surprise, first, that I had not heard about it and, secondly, that we had nothing like it in this country. Subsequent examination and study of the subject has convinced me that the giro system is convenient, it is simple, it is effective, and it has been successfully operated in other countries.
I have here a short extract from the Financial Times of 9th February, 1963:
The need for the United Kingdom to modernise its money transmission service by introducing a postal giro system of the type operating in so many other advanced countries remains as great as ever.
That is only one of many extracts I could give from the Press which seem to me to show that there is a growing realisation of the value of this system and a growing demand that it should be adopted, or that something like it should be adopted, in this country. In fact, I cannot for the life of me understand why it has not been adopted, unless it is the fairly obvious reason, the opposition of certain vested interests, particularly the commercial banks.
The Post Office Savings Bank was a great pioneering effort about 100 years ago, but I submit that it is out of date and insufficient for the needs of the day. There is far too much money passing about, and, of course, that leads to much of the increase in crime we have been having lately, such as the notorious wage snatches which seem to go on week by week. One description which I saw of our system of using so much actual cash in the settling of accounts said that it was like fetching water in buckets from wells rather than using a modern plumbing system.
The House itself recognised this difficulty and this need when we passed the Payment of Wages Act in 1960. That Act, as we all know, has not been very much of a success. Why? It is very obvious, I think. The worker realises the difficulty there would be in cashing his wages cheque. The bank is closed when he finishes his day's work and he


has to ask a small shopkeeper, or someone else, to cash the cheque for him. He does not have a bank account because he realises that bank charges will be involved and, therefore, he does not want payment by cheque.
According, again, to the Financial Times, only about one-fifth of adults have bank accounts—that is, at commercial banks; other people have accounts in the trustee savings banks, but certainly not a very large proportion of the population. I believe that the banks are now to close on Saturdays altogether, which will make it even more difficult for workers to cash ordinary cheques.
The Financial Times also wrote on 31st March, 1962:
There is no doubt that the discovery that commercial banks not only do not pay interest on current account funds but may even levy a charge on the customer for his use of money transfer services tends to be a major obstacle to the recruitment of working class customers whose banking experience has previously been concerned only with savings institutions.
So far as I can see the giro system meets the need which is emphasised by quotations of that kind. It has been running in other countries, and so it has been tested. This is not an untried idea. Incidentally, it occurs to me that up to now those other countries have not had the great advantage of modern electronic computers, which would surely make it much easier to run a central clearing system for a giro service of this kind.
While we are well ahead technically and scientifically in many things in this country, and are at the moment considering such things as the introduction of the metric system and a 24-hour clock and one or two other things which have been in operation elsewhere for a long time, we are very loath to adopt systems which are operated elsewhere. We like to inaugurate new systems, but we do not very much like to adopt other people's ideas, I suggest that we ought to benefit from the experience of others, and that while it may be painful for us to do so here is an opportunity to adopt something which would be of real public service and perhaps of great benefit to the Post Office as well.
Up to now we have had the discouraging replies which I have mentioned. Today, I am hoping that we shall get better news. Today, we have a very progressively minded Postmaster-General in

a progressively minded Government, and I hope that today he will give us a favourable reply.

4.25 p.m.

Mr. Ray Mawby: I think that the House will agree that the hon. Gentleman the Member for Accrington (Mr. H. Hynd) has put forward his case in the very reasonable and courteous way he usually does, and as we always expect him to do whenever he has a case to put to the House. When he refererd to my reply when I was Assistant Postmaster-General, the reply on 4th March, 1963, to the late Will Williams—and we all still deplore his passing—that was the first effective day of my period of office as Assistant Postmaster-General. Therefore, I think that the second reply which I gave, and which the hon. Gentleman also quoted, the one on 6th December, 1963, probably represents more my point of view than the first one.
Upon first coming into office and upon hearing the case so well put by the late Will Williams I was attracted to the scheme. It has attractions. After all, it makes it possible to make certain that wages can be paid by cheque, or, indeed, as the hon. Gentleman said, to be paid directly into one's account by quoting one's number. Obviously, there would be far less cash moving about the country because it would be a matter of credit being transferred from one person to another, and so there would be less opportunity for the many robberies which take place, and which, we must always remember, while involving property, also involve so many postmen and others who are thus brought into danger—of being coshed, for instance—and of suffering very badly indeed.
At first sight the scheme is very attractive indeed. There is also the other point the hon. Gentleman put, that the post offices normally are open for longer hours than the joint stock banks. To the ordinary person wanting to transact business the fact that the post offices are open very often at times when he ceases, or before he begins, work gives it an additional attraction.
However, I think that, after one has said that, one has to look very closely at the whole system and particularly where it has been in operation for many years, as the hon. Gentleman has said, in various Continental countries. It is


important that one should pay attention to what the Radcliffe Committee said in its Report. The hon. Gentleman was very fair in pointing out that what the Radcliffe Committee said was that in the absence of an early movement on the part of existing institutions to provide this sort of credit transfer system the Post Office would be advised to institute a scheme of this sort.
As the hon. Gentleman said, the banks have introduced the credit transfer system, which is something that one does not find on the Continent. There are many reasons for this. One of the main compelling reasons is that there they have a giro system which provides facilities equivalent to those of the credit transfer system. There is, therefore, no reason for the Continental banks to introduce a credit transfer system such as we have here.
The next point that we have to consider shortly is whether the system would be able to provide the services required and be able to pay its way. I spent some time on the Continent looking at the systems there. I found that in most cases they do not pay their way, that, in fact, they make a loss. But this is not a reason for ruling out the adoption of the giro system. If it provides a valuable service, and other Post Office services get additional benefits, the fact that it might itself lose money is not a compelling reason for not introducing it, but it is one of the factors to be taken into account.
The giro system as operated on the Continent falls into three main sections. First, there is the section in which the person who submits a bill has an account, and has invested money in the system, and the person who pays that bill also has an account. In other words, the two people involved in the transaction have accounts in which they have invested money. That is the first leg of the system.
Secondly, institutions such as electricity boards, insurance companies, large stores, and so on, have accounts with the giro system, but most of the people to whom they send bills do not have one, and they have, therefore, to go to the Post Office to purchase the necessary cheque by which to pay their bills.
Thirdly, the person submitting the Bill does not have an account, but the person

paying it has, and, therefore, the person who receives the cheque has to go to the Post Office to receive his money, less the service charge made on the transaction.
The important thing to remember is that to get the scheme off the ground one must have a large number of people who have an account number, and who are prepared to invest money in the system. On the Continent a charge is made for the second and third legs of the service, but no charge is made for the first one. The reason is that the service under the first leg is paid for by the interest accruing on the money invested by the account holders. If the system is big enough, the amount of interest accruing will remain constant, because it is merely a matter of credit going round in circles, as the name giro suggests.
If we are to say that anyone can be a holder of a giro account, there must be sufficient money invested at the beginning to provide the Postmaster-General with enough interest to pay for the service, otherwise he will have to make a charge to those who want to use it, and if a charge is made many of the attractions of the scheme will disappear because it will not be able to compete with equivalent services provided by other institutions, probably at no charge at all.
Many of the continental institutions are account holders, and have an account number. Their bills are presented in such a way that if the person who receives them is an account holder he can pay them by putting them in an envelope and signing the necessary form. The money is then debited from his account, and credited to that of the institution. If he does not have an account, he can go to the nearest post office and purchase the necessary credit to pay the bill.
One of the great advantages of this system is that it enables an undertaking to reduce the number of its employees. For example, in the normal course of events an electricity undertaking ensures that a cashier is on duty at its showroom. It is his job to accept money from people paying bills, to give them receipts and change. If, however, that undertaking had a giro account, all the people to whom it sent bills could transact their business at the post office rather than go to the showroom, and it has been


shown that people would rather carry out the physical side of a business transaction in places other than electricity showrooms and insurance offices.
If it were possible to prove to the institutions that they could quickly reduce their overheads by investing a large amount of money in an account with the giro system, we would have a large amount of money which would provide the Postmaster-General with the necessary interest to pay for the servicing of the scheme, which, obviously, will be pretty high.
The problem is that on the Continent there are few wage earners who even now hold giro accounts, although it is true that many people have got into the habit of going to the Post Office to purchase the necessary credit to pay their bills. The bills are presented in such a way that this is the best way of paying them. There obviously has to be a charge for this service, yet very few people are prepared to open an account and invest a sum of money on which they will not draw any interest.
In this country the banks operate a credit transfer system, and the question that one has to ask is: have they scraped the bottom of the barrel, or are there ways and means by which we can attract people who, at the moment, do not use the credit transfer scheme into an alternative scheme of credit transfers whereby, although they do not become account holders, they will, nevertheless, be prepared to pay the necessary service charge to operate a credit transfer scheme operated by the Post Office? Even the Postmaster-General, who has all the facts in his possession, is unable to give a definite answer to that. He is forced into the realms of the unknown. He can only say what he thinks will be the number of people likely to enter into, or use, a credit transfer system operated by the Post Office in the future but who at the moment are not prepared to entertain such a system operated by the joint stock banks.
Therefore, right from the word "go", if a scheme is to be initiated it must attract a large number of account holders. The aim on the Continent—and it would have to be similar here—is that all the details of the transaction should be completed within 24 hours. The aim is that

the person who pays the bill has his account checked to ensure that he is sufficiently in credit; the transfer of credit goes to the person presenting the bill; he is informed that that amount has been added to the credit of his account, and the payee is informed that he has paid that amount and that the credit in his account has been accordingly reduced—all within 24 hours. If that were not done people would not be satisfied with the system. That would obviously entail a great deal of work.
We would have to make certain that no giro account holder overdrew his account. The whole cost of servicing the system must rely upon the interest gained by the Postmaster-General from the money invested, and if a person went into the red it would be a liability rather than an asset, in the production of interest. The question then arises; if we are to obtain sufficient interest to pay for all the servicing do we say, right from the beginning, to each account holder, "A certain amount of money will have to remain in your account at all times, so that we can guarantee that we shall be able to draw at least a certain amount of interest"?
This is the rule in Switzerland. The minimum that has to be left in is not high, but that is the rule. An account holder cannot extinguish the whole of his account. A certain amount must be left in to pay for servicing, and so on.

Mr. Raphael Tuck: Is not that exactly what the trustee savings bank demands here?

Mr. Mawby: That is true. My point is that a certain limit has to be decided, below which an account holder cannot go, and it is important not to fix that limit too high, so that potential investors are not put off.
The Postmaster-General may have a view, just as I or anyone else may have, of how many people would become account holders in the first instance, and how many would continue to invest in the future if the scheme got under way. It is entirely a matter of conjecture. All I say is that if we started a scheme and persuaded 5 million people to become account holders in the first place, we would have to provide that each account holder would have to leave at least


£100 untouched in his account in order to make certain that sufficient interest accrued to pay the service charges. If more people joined the scheme a lower figure would be needed, and if the Postmaster-General could persuade a number of large institutions to join a sum of £1,000 would mean nothing at all to them. I am thinking of such institutions as electricity boards, gas boards and insurance companies.

Mr. Robert Cooke: My hon. Friend is suggesting that £100 might be the float required for each account. Does not he appreciate that even having to keep one week's wages locked up in such an account would be an intolerable strain upon many households in the country, whose members live from hand to mouth and have incurred quite a large hire-purchase debt, and that sort of thing?

Mr. Mawby: The most important thing is that we would be initiating something completely new to many people. Obviously, in the first place we would hope to interest people who, at the moment, have Post Office Bank accounts, but who are still suspicious of the activities of the joint stock banks, and who would prefer cash to a piece of paper. Up to now these people have been reticent in accepting the payment of their wages by cheque. These are the people that the Postmaster-General would hope to interest in the scheme first of all, because they are the ones who at the moment feel that they have no alternative but to rely on the system which operates at present.
To expect that type of person to be prepared to invest his money and to be told, when he wanted to pay an account, that he had exhausted his credit to the £100 level, would be to expect too much. We therefore have to reconcile ourselves to the fact that for a long time the use of this service would be in the second grade; that is, we would hope that large institutions would become account holders, but that most of the people who paid their bills would go to the post office to purchase their credit rather than going to the local showrooms or insurance offices, or have insurance agents calling at their doors, and so on.
The other difficulty—and this applies on the Continent—is that the costs of the scheme are normally covered by the interest that accrues on the invested money, and when there is a fall in the Bank Rate those who are operating the system, which may be a very efficient one, suddenly find that it goes into the red, not because of any action of theirs but simply because the Bank Rate has fallen and the amount of money invested attracts a lower rate of interest.
The hon. Member for Accrington said that one of the effects of the scheme would be to supply the Exchequer with funds at low interest rates. That is possibly true, but if we did that we would probably be asking Peter to pay Paul. If the money which is invested in the accounts by the account holders is to be lent to the Treasury at low interest rates the problem of paying the cost of servicing becomes more difficult to solve, because in running his Department the Postmaster-General ought to make certain that he receives the best rate of interest on the money he invests so that he can run his service at the highest possible standards.
Even the Postmaster-General can be thwarted—as has happened on the Continent—by a sudden change in the Bank Rate. Although the amount of interest accruing on the money invested suddenly falls the costs of the service remain constant, so that it goes into the "red", and some other part of the Post Office services has to cover the loss made on this service. That is another very important point which should be considered.
In a period of high Bank Rate, there is no question that the continental systems can break even, but there is no system in which Bank Rate is always high. The aim of the present Government, as of other Governments, is to make certain that Bank Rate does not remain higher than it need do. Whenever Bank Rate falls, it immediately puts the scheme into jeopardy. Most of the continental systems have a job to break even, and many make a loss.
The last point of substance is of how far we should extend the service of the giro system. From what the hon. Member for Accrington said—and from what has been said by the Association of Sub-Postmasters—the view seems to be that


one should be able to transact business in a giro account even at sub-post office level, that is, with the grocer's shop or stationer's which has the concession to supply post office equipment. The general idea is that it should be brought down to sub-offices.
Obviously, if the institutions are to be interested in this, it must come down to sub post-office level. If people live in large towns, they are within easy reach of a Crown post office, and there is no difficulty for them, but, for the many people who live in villages and on the outskirts of towns, the fact that they would have to go to a Crown office instead of using their normal sub-office would put them off becoming account holders in the giro system. This would add greatly to the expenses of the scheme if it were put into operation. We would have to make certain that the local sub-offices were effectively in touch with the central office which had the accounts, were able, fairly quickly, to find out whether a person's account was sufficiently in credit and to be able to make the necessary arrangements to transfer the cash.

Mr. H. Hynd: The sub-post office might have a telephone.

Mr. Mawby: This is true, but I would point out to the hon. Gentleman that my experience on the Continent shows that, if one is to transact business and get it completed within 24 hours, the telephone is now accepted as being an antiquated instrument to do this job. One has to move into the realm of telex equipment and data transmission equipment if one is, in this modern world, to be able to carry out a transaction at the speed the customer would expect. The hon. Member may be quite right in that someone using a sub-office may be happy to be told, in three days' time, that his business has been transacted. In those circumstances, the present equipment would be quite satisfactory. However, the experience on the Continent shows that, if one is to satisfy the account-holder, the whole operation should be transacted in 24 hours.
We would have one advantage, that we could install the most modern equipment from scratch, learning from the experience of those on the Continent who are only now, in certain places, installing computers and memory-stores. However,

even with that advantage, the capital cost of a system such as this would be very heavy. It is difficult to calculate what loss to existing post office services which would no longer be required because a person was using a different system.
I am talking of the reduction in postal orders, money orders, and so on, which would be reduced if the person was using a giro account. This would have to be taken into account. The Postmaster-General has far more up-to-date facts and figures than I, but I felt that I ought to put my views to the House, as one who was attracted at first sight to the system and who, even now, is not prepared to condemn it. I have tried to put some of the problems which we will have to face, inevitably, if the scheme is introduced.

4.55 p.m.

Mr. Raphael Tuck: I would remind the hon. Member for Totnes (Mr. Mawby) that first thoughts are very often the right thoughts. It is stupid to exhort the public to sweep away obstacles to efficiency and urge them to be sympathetic to modernisation and interest themselves in computerised methods, as long as the national facilities which are needed to bring our financial, economic and social structure into line with other advanced nations in Western Europe are not provided by Parliament.
The transmission of money in exchange for goods and services is directly associated with about 99 per cent. of all commercial and private transactions. Unless great care is taken to ensure that the process of money transfer and receipt is simple, secure, and efficient, we shall find that the cost of transmission and receipt is added to the amount transferred and becomes a charge on the price of the goods and services.
British methods of money transmission—the bank cheque, the credit transfer, the postal order and the money order—are the most costly, cumbersome and inefficient in the world. These methods are the cause of colossal national inefficiency, wasted resources and even, as has already been said, criminal activities of many kinds—vicious attacks on members of the public and of bank and post office staffs. Successive Governments have failed—perhaps they have not been courageous enough—to introduce more modern methods into our system. Therefore, commerce


and industry have been left to struggle with these archaic methods while all the time being exhorted to keep costs down, raise productivity and introduce scientific business procedures.
Where does the blame for this appalling position lie? I suggest that it must be shared between the banking interests and the Post Office. We pride ourselves on being an advanced civilised nation, but our money transmission methods cannot measure up to the needs of modern business management. Yet we stubbornly retain those methods. It has been said, and I agree, that the British people try to make things as uncomfortable for themselves as they can.
An example comes to mind. These cartwheels which we call pennies and which weigh down our pockets are, in Canada and the United States, smaller than a sixpence. We try to make things uncomfortable for ourselves. This stubborn retention of outdated methods must compare unfavourably with our Scandinavian, Austrian and Swiss E.F.T.A. partners, with E.E.C. and with many other countries in Asia, for example, Japan.
The question which arises is why should we not also have a money transmission system which is simple, cost-free, secure, and which provides an efficient means of transaction between payer and payee? There is no reason why we should continue to spend so much time in writing out bank cheques, credit transfer forms, stubs, counterfoils, postal orders and money orders, with all the ancillary preparation of things like letters, envelopes, advice notes, receipt forms, postage stamps and, not least, the obligation to pay stamp duty on this monstrous, inefficient, and unscientific method.

Mr. Robert Cooke: I hope that the hon. Member realises that the reason for this is the activities of the Inland Revenue, which the Government's Finance Bill proposals have done nothing to simplify—

Mr. Deputy-Speaker (Dr. Horace King): Order. The hon. Gentleman must confine his intervention to the topic under discussion.

Mr. Tuck: In over 40 countries in three continents there is a postal giro

service, which makes the British money transmission methods look like the fumblings of a primitive people. There have been previous debates on this subject. The supporters of a Motion have always been at a disadvantage because of the absence of general knowledge about giro—what it is, what it does, how it operates and how widely it is used, and the financial, economic and social ills that the country suffers as a direct result of not having this public service.
This lack of knowledge about giro appears to have been nurtured by successive Conservative Administrations. Perhaps to their banking and other free enterprise friends the propagation of information about giro is rather dangerous. We do not know. But the result has been that public pressure to establish a giro service has always been very small.
From time to time, hon. Members on this side of the House and Liberal Members have pressed the Conservative Government to introduce the giro service, particularly after publication of the Royal Commission's Report in 1959. The Commission said:
There is some evidence for thinking that there is some demand for a simple transfer service, without the ancillary services which the banks offer to their customers.…We consider that, in the absence of an early move on the part of existing institutions to provide the services which will cater to the need we have in mind, there would be a case for investigating the possibility of instituting a giro system to be operated by the Post Office.
The Conservative Government ignored this advice. They even chose to discredit giro so as to make their refusal to implement that part of the report appear reasonable. I would not suggest that they tried to mislead the public, but if they had, they could not have made a better job of it.
On 6th December, 1963, the hon. Member for Totnes (Mr. Mawby), who was then Assistant Postmaster-General, claimed that many Continental postal giros were operating at a loss, in particular that the Dutch giro had made a loss of £300,000 in 1962. When this was investigated, the Dutch authorities said that the amount was not £300,000, but 300,000 florins—which is rather a different matter. But in any case this was


capital investment in computer equipment and not day-to-day loss.
The hon. Gentleman also claimed that if Britain had a postal giro service, and the country went in for a policy of cheap money, the service would fail and we would be in the "red". If he had referred to the French postal giro service he would have realised how unrealistic that claim was, because for years that service has operated on a cheap money policy of only 1·5 per cent. interest. The hon. Gentleman talked today about the hacking, but on 4th March, 1963, he said:
… our estimate is that a giro which handled 1 million accounts would need the backing of balances totalling about £200 million, averaging about £200 per account."—[OFFICIAL REPORT, 4th March, 1963; Vol. 673, c. 173.]
I remind the hon. Gentleman of what my right hon. and learned Friend the Member for Newport (Sir F. Soskice)—now Home Secretary—said about that. On 6th December, 1963, my right hon. and learned Friend said:
There is now £538 million on deposit with the Post Office Savings Bank, on an annual average, so I am told, so I should not have thought it too ambitious to expect to get a backing—once the system was publicised, and understood in practice—substantially in excess of what the hon. Gentleman said was necessary."—[OFFICIAL REPORT, 6th December, 1963; Vol 685, c. 1577.]

Mr. Mawby: I remember the point made by the right hon. and learned Gentleman the Home Secretary. It may well be valid except for the fact that the money invested in the Post Office Savings Bank, draws interest whereas the money invested in a giro account would draw none. It is a moot point as to whether the same number of people would invest the same amount of money in the giro system when they would have no interest to gain as they invest now in the Post Office Savings Bank.

Mr. Tuck: The institution of a giro system would not preclude continuance of the Post Office Savings Bank. Many people in the management of day-to-day affairs would not want something that they get now under our banking system—a system of current account which is unwieldy, expensive and unscientific—

Mr. H. Hynd: And does not pay interest.

Mr. Tuck: —and, as I am reminded, does not pay interest.
The attempt to prevent the British public from learning about the advantages of the giro system has reacted through the Press on book publishers. The result has been that it took nearly 15 years for the author of the first book on giro to find a publisher in this country willing to risk incurring the displeasure of the banking world. Last October, the book "Giro Credit Transfer Systems" was published. It has been instrumental in building up a body of informed public opinion which now urgently looks to Parliament to introduce a giro system.
The author, Mr. F. Paul Thomson, a systems engineer, is one of my constituents in Watford. Mr. Thomson must be in a unique position, because this is the first book about an 82-year-old financial and economic system which has motivated Government planning in over 40 countries in three continents. When working in Scandinavia, Mr. Thomson was intrigued by the means used to transmit money and credit by the postal giro. He became so convinced that the principle should be extended to the British Post Office that he made a complete study all of giro systems.
As a systems engineer, Mr. Thomson was brought to the realisation that compared with the facilities provided both nationally and internationally through the giro for continental commerce, British firms and individuals were being forced to shoulder the cost and the inconvenience of an intolerable, inefficient, and time consuming money transmission system.
Mr. Thomson's book shows, inter alia, how British firms can obtain giro accounts abroad and makes recommendations as to how a British postal giro system could be organised. Such a service would lay the foundations of the computer-centred financial, economic and social reorganisation which Britain so vitally needs and without which we may not hope to survive as an advanced civilisation.
I want to refer to what my right hon. Friend the President of the Board of Trade wrote about the book. He said:
Mr. Thomson has performed a very valuable service in presenting to the British public so thorough and convincing an account of the possibilities of the postal giro system. Clearly, the giro cheque systems of other countries


have progressed far beyond anything known in Britain; and the present Post Office Savings Bank—a pioneering effort one hundred years ago—is now an anachronism hampered by artificial restrictions likely only to protect its commercial competitors. Mr. Thomson's admirably factual book leaves me in no doubt that a major reform and rearrangement of the P.O.S.B. on these lines would be of great benefit to the British public and to the smooth working of our whole economy.
But perhaps an even more significant effect of the book is the realisation by the bitterest opponents of the postal giro service—the banking interests. The Journal of the Institute of Bankers declared:
This very comprehensive study of postal giro systems should prove most useful not only to students who have no pre-knowledge of such procedures but also as an addition to the knowledge of those who have had the opportunity to examine the working of continental giros at first hand.
I should point out that in 1961 the joint stock banks, possibly in an effort to forestall any possible official action consequent on the publication of the Royal Commission's Report, introduced what they termed a credit transfer system. That is a facility through the banks and is a device which was heavily advertised with the object of inducing employers to persuade employees to accept remuneration by that means and open accounts at banks. Perhaps it is a figment of my evil imagination to say that it was a plan to induce wage earners away from the Post Office Savings Bank, but I will leave it at that.
Some prominent bankers have declared that the credit transfer system is analogous to the Post Office giro system and have also said that a giro service would be against the public interest because it would merely duplicate the existing facilities. That is not so, and while I do not have the time to go into this issue of credit transfers, suffice to say that the Finance Houses Association's Quarterly Review—Volume 6, No. 2, for June, 1965—stated on page 45 onwards, in an article again by Mr. Thomson, that the credit transfer system was just as cumbersome and inefficient as the other systems which we already have.

Mr. Robert Cooke: The hon. Gentleman has referred to the June edition of that publication. Is he aware that in an earlier issue of the Finance Houses Association

Quarterly Review Sir Ronald Thornton stated:
The Post Office giro is a good system, but it is restricted. The banks think that theirs is better…. The banks are not satisfied as to the need for a … giro … but if … there is a demand for a centralised giro system, then they have their plans ready and could put them into effect within a reasonably short time.

Mr. Tuck: Of course, the banks are not satisfied. Nobody would expect them to be satisfied with such a service. Indeed, the bitterest opposition has come from the banks, as one would expect. They do not want any competition. It is time that we called a halt to this blocking of national modernisation and progress. An increasing number of people are realising that if we are to produce more, save more, be more efficient and encourage computer methods, one of the essential means for achieving this is the establishment of a comprehensive postal giro service. And it is only the Government themselves who can carry it out.
For years, all the Western European countries except the United Kingdom, Eire, Portugal, Spain, Greece and Turkey have benefited enormously from the beneficial procedures which are possible only as a result of a giro service of this kind. Is it not disgraceful to find the United Kingdom lagging behind in this backward fashion?
The proposal for a five-day week for banks, plus increased charges, makes a postal giro service even more necessary. Moreover, while cash is actually handled in large quantities there is bound to be a continuing upward trend in the number of crimes of violence involving money and those who carry it. A giro system would largely overcome these problems and concurrently increase national savings and provide salary and wage earners with bank and savings facilities which they do not have at present.
A Labour Government—and I emphasise "Labour"—could be justifiably proud of introducing a postal giro service. In addition to the obvious benefit to the economy and the community, such a service would represent a move in the best traditions of Socialism and co-operation. It is Socialist because it provides for the nationalisation of the means of payment and thus breaks the monopoly—

Mr. Robert Cooke: Ah!

Mr. Tuck: —held by the joint stock banks. It is a co-operative measure—

Mr. Cooke: Back to Clause Four.

Mr. Tuck: I would not go so far as that. But it is a Socialist measure. It is a co-operative measure also, because it provides the means whereby the profit earned by the account holders is shared by the account holders and the nation. The account holders benefit from the many types of free service available to them and the nation benefits from access to loans at low rates of interest. In Sweden, for example, this source of cheap money finances local authority housing development and post office modernisation. That is definitely an achievement. It has also been claimed that West Germany's astronomical and swift post-war recovery has been largely due to the economic facilities provided by its postal giro system.
We have in our hands the power to introduce a legislative Measure which would improve the financial structure of the United Kingdom and, therefore, make for economic stability and expansion. It would be an imaginative, stimulating and forceful token of the Government's determination to do this, if they took action now and introduced legislation to provide for a postal giro service. I urge the Government, in the most strongest terms, to find time in the next Session to do this.

5.16 p.m.

Mr. Jeremy Thorpe: I intervene in the debate briefly to give my warm support to the Motion. Not for the first time have I supported a Motion of this kind and I hope that at last action will be taken on the subject. I pay tribute to the hon. Member for Accrington (Mr. H. Hynd) for having initiated this debate.
The hon. Member for Watford (Mr. Raphael Tuck) was rather straining my loyalty when he based his support on the fact that a Measure to introduce a postal giro service would be a good Socialist Measure. I approach the subject with the idea that it would be good Liberal competition. Perhaps we could compromise on it.
I was pleased that the hon. Member for Accrington mentioned Mr. Williams, the former hon. Member for Manchester, Openshaw, for whom we all had great affection and who made some excellent, useful and loyal speeches on Post Office matters. The last time I spoke on this issue in an Adjournment debate, to which the hon. Member for Totnes (Mr. Mawby) replied, seated next to me was the then hon. Member for Openshaw.
The hon. Member for Accrington mentioned that the matter had been opposed initially by Sir Herbert Samuel, the Liberal Postmaster-General of the day. Another one of his distinguished colleagues in that Administration was, of course, the father of the present Postmaster-General and I know that the right hon. Gentleman and I are agreed in feeling that whatever the reasons that existed for rejecting the Measure at that time, they must have been unimpeachable and must have had all the force of logic and lucidity behind them. I very much hope that I, speaking as a political descendent of the one, and the right hon. Gentleman, as the lineal descendent of the other, will be able to say that we are again in agreement, although that on this occasion we can come to a contrary conclusion.
The Financial Times stated on 18th August, 1962:
There is hardly an advanced country where the official money transmission service is as cumbersome and expensive as in Britain".
That is less slightly true today than it was then, the credit transfer system having since been initiated by the banks, but it is still very true of our banking system in this country.
The hon. Member for Totnes said that on the first occasion on which he had spoken on this subject he had been a little more enthusiastic than a closer examination of the issue might have led him to be. I found his speech today distinctly more hopeful and optimistic than his speeches on this subject when he was the Assistant Postmaster-General.
He asked whether or not it was likely to pay and cited the example of many European countries. There was a powerfully argued case in The Times on 19th January, 1965, when the General Secretary of the National Association of Sub-Postmasters indicated that in 1962 the


Swiss post office had borrowed £135 million from its giro account for plant modernisation and had advanced £83 million to the Government for national projects whilst the French Treasury had benefited in the same year by a loan of £1,500 million. We are, therefore, dealing with large sums of money.
While it is perfectly true that credit transfer systems exist in this country, it is equally true to say—and I hope that the hon. Member for Bristol, West (Mr. Robert Cooke) will, if he wishes to intervene, rise to his feet and not make sedentary murmurs—that in Sweden there are the same credit transfer facilities working in the joint stock banks and that there is co-operation between the Swedish banks and the Swedish postal giro system. I believe that they work very closely together, indicating that the two can be interleaved.
I remember the hon. Gentleman saying in that debate that the initial cost of launching this system would be about £4 million, and I should like to have the right hon. Gentleman's view of the likely cost. On that occasion, the hon. Gentleman mentioned that a minimum average holding would be £200. Now, having considered the matter further, he has suggested a holding of £100, which I would consider to be nearer the average figure one would expect a giro holder to have.
Even the existing Post Office facilities are extremely expensive compared with what a giro system could produce. Postal orders and money orders cost about 1s. 3d. for every £10 and the cost may even have gone up.
One can briefly enumerate the advantages of this system as follows. The hours at which post offices and sub-post offices are open are far more extensive than those of the banks. This represents a convenience to the public. There are 23,000 sub-post offices and 2,000 Crown offices, and the giro system would provide a way in which they could give a very valuable and extended service. As it is, in the last 20 years we have extended the Post Office services in ways that were not even in the mind of any Postmaster-General 50 or 60 years ago. I have always had a very great deal of sympathy with sub-postmasters. They do not have a very large income—theirs is not a well-paid job—and the giro

system would help them as well as the public.
Crime has been mentioned. I agree with the hon. Member for Watford that the Payment of Wages Act has not produced that fall in payment by cash that one would have hoped for, and this system is one means by which it could be brought about. It would also save a fair amount of duplication and, as a result, a fair amount of labour.
The giro system would be particularly valuable in the rural areas. Many rural people have cars, but those who do not are finding that communications are becoming increasingly difficult. Many branch railway lines have been closed down, and a good many bus services are being restricted. It is becoming steadily more difficult in remote rural areas for people to get to the electricity or gas offices to pay their bills. They would be immediately benefited by the giro system. I do not know whether, statutorily, nationalised industries are directed or persuaded but, in any event, such nationalised industries as gas and electricity should be encouraged to open giro accounts. Similarly, the system could be used for the payment of rates, and many other payments in respect of public services could be channelled through the Post Office system. Competition with our existing banks would also be a very good thing to have. There is nothing like competition; no human organisation exists that does not benefit by it. I have sometimes thought that there should even be a statutory limit on the majorities held by hon. Members.
Hon. Members certainly recognise the potential benefits of the Post Office in this respect. The post office in this House is somewhat exceptional. Apart from the fact that it is probably the only one that has a carpet on the floor, I understand that it cashes cheques each day to the value of about £2,000 to £2,500. I do not suggest that the House post office is in any way comparable with others; nevertheless, even those who are somewhat hidebound by tradition will admit that we have something that works here which is certainly well within the technical capabilities of post offices generally.
I very much hope that the Postmaster-General will be able to give us some good news today. It is not, perhaps,


without coincidence that some 50 or 60 years ago—and here I am subject to correction—there was a move to provide cheaply-produced literature for people who might not otherwise be able to afford books. It was known as Benn's Sixpenny Library. I suggest that it would be in an excellent family tradition now if we were to set up Benn's Bank. It would be the people's bank, sited in all our existing post offices. I urge this on the right hon. Gentleman, not because it is Socialism or Liberalism, but because it will be good business for the Post Office, and a very real convenience to the public at large.

5.26 p.m.

Mr. Harry Randall: I congratulate my hon. Friend the Member for Accrington (Mr. H. Hynd) on his luck in the Ballot, on his choosing the subject of giro for this debate, and on an excellent and persuasive speech. Many members of the Post Office will be extremely grateful to him for ventilating this subject once again.
In such a debate as this, reference to my late colleague, W. R. Williams, was inevitable, and I am grateful to the hon. Member for Devon, North (Mr. Thorpe), for speaking of my friend as he did. I am sure that, had he been here today, Mr. Williams would have thoroughly enjoyed himself; in fact, he might even have been sitting in a position from which he could have made an announcement that would have pleased many of us in another respect.
I have listened to the hon. Member for Totnes (Mr. Mawby) speak on this subject on three previous occasions. On the first occasion, he said:
A giro would have the advantage of speed of transaction, longer opening hours and, very likely, cheapness."—[OFFICIAL REPORT, 4th March, 1963; Vol. 673, col. 174.]
On the second occasion, when the hon. Gentleman said that the door was closed a little more tightly, I was a little dismayed, but this afternoon the hon. Gentleman has said that, in spite of certain arguments against the system, his mind remains open. I hope that the persuasiveness of my hon. Friend the Member for Accrington will make him realise that this is a service which the Post Office needs, which the nation requires, and which could be of great benefit to our people.
The most recent statement my right hon. Friend has made on the giro system was on 12th May when, in answer to a Question by my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), he said:
I have not yet completed my review and it may therefore be some time before I can make any statement.
In answer to a supplementary question, my right hon. Friend said:
I cannot say exactly when the review will be completed and the statement made. We thought it necessary to study the latest European experience and also to assess the implications arising from computer operation."—[OFFICIAL REPORT, 12th May, 1965; Vol. 712, c. 488–9.]
I have no complaint whatever about that because of the inquiries my right hon. Friend has instituted. I am grateful that he has done this. After the two previous debates a very careful study was required before launching into a big and perhaps very complex Measure. I am therefore grateful that the Postmaster-General has undertaken an inquiry in the past few months.
The introduction into the Post Office Savings Bank of a postal cheque system, with or without giro, is a very old demand. It goes back to the early days of this century. It has been considered, argued about, campaigned for and inquired into. From the knowledge I have and the reading I have undertaken, I find that there is a good deal of opinion solidly behind the idea, but unfortunately, it has never been accepted by this House. There was the Radcliffe Committee of 1959. It expressed the need for a much more simple system of transfer of payments. That Committee said that it saw the need for an investigation. Then there were the two debates in this House in which my hon. Friends took part from the Opposition benches. We were unable to get the then Postmaster-General to accept the principle.
I am glad that my right hon. Friend has called for a review. The need for such a review is shown in the light of the changes which have taken place since the early agitation on this matter. Although the old arguments, facts and views can stand the test, nevertheless nothing stands still and there has been much change during the years. This is an additional argument for a careful review to be undertaken on


this subject. As has been brought out in this debate, banking facilities offered by the joint stock banks have changed. They now cater for smaller depositors. They have also introduced credit transfer. The trustee savings banks have also introduced the cheque system which, I understand, has operated since 21st May. There is a charge for that service of 1s. per cheque, plus stamp duty. It is subject to an allowance of 10 free cheques a year for each £50 of retained balance. I also understand that 6d. of the charge goes to the joint stock banks. So this is good business for the trustee savings banks and the joint stock banks also get a little out of it.
A more immediate matter is the computerisation of certain aspects of savings bank work, which again is a reason why a careful review should be made. There is every justification for it. If my right hon. Friend is to announce tonight his intention to establish a post office giro system, it cannot be argued that he does it without thinking, without investigation, and rushes blindly into it. As has been said, this is no new idea. It is a simple system of credit transfer eliminating the need to handle notes or cash, and it would assist people who have no bank account. It is in operation in every major country in western Europe except Great Britain, Spain and Portugal. I do not like our partnership in this matter, and I shall be glad if we can get rid of it.
The strongest feature of a giro system is simplicity of operation. It is neither cumbersome nor expensive. In this country a large number of people do not need the more elaborate and expensive system provided by the joint stock banks. They do not need the credit facilities made available by the joint stock banks, or the substantial overdrafts or to transfer large sums of money. They do not require the greater facilities provided by the banks, nor do they want them. They want a simple form of transfer of money.
Let us take a glance at some of the facilities which the Post Office offers. They prove that the small man is interested. For example, about 650 million money orders and postal orders are dispatched each year, representing about £800 million. The great bulk is in postal orders—630 million, valued at £550 million.

That is a colossal sum and in the main it affects the small man without a great deal of finance behind him. Each year 14 million money orders representing a value of over £230 million are used as another means of transferring money for people whom we would expect to support a giro system.
It is interesting to note that the money order system was introduced in this country in 1838, after 40 years during which it had been conducted on a semi-official basis. The number of money orders issued in the first year, 1839, was 138,000. Within a few years the number was running into several million and by 1880 it had reached 17 million. Postal orders were introduced later to cater for smaller sums at lower cost. This new service filled an enormous need and it rapidly outstripped the money order service so that by the end of the century the postal order service was running at 117 million with a value totalling £25 million. The Post Office showed the earlier initiative in developing money transactions.

Mr. Robert Cooke: I hope the hon. Member realises that quite a lot of postal orders are paid in through banking accounts at present, so the banks have a part in this matter.

Mr. Randall: Yes, but they are purchased at the Post Office counter. It was the Post Office which showed the earlier initiative by providing machinery whereby transfer of money could take place without the use of actual hard cash. How can we avoid the unnecessary passing around of large sums of money? The remarkable thing is that the Post Office was involved in this matter in the 1880s by the use of money order and postal order services. The Post Office entered a field which the joint stock banks were not prepared to enter.
To return to giro, it cannot be argued that there is no need for such a service. There is a need for facilities to enable people to transmit money cheaply and efficiently. Moreover, the service could encourage small savings and, what is equally important, the spread of banking habits. It could give a new boost to savings and give the necessary encouragement to the payment of wages by cheques.
I have an interest to declare. I have served in the Post Office for many years.


I believe that it is time that the Post Office looked round for new services. This is a service which could bring revenue to the Post Office. I want that revenue for the Post Office. Why should not the Post Office get it? The Post Office long ago introduced postal and money orders. Why cannot the Post Office be permitted to do this? If there is a revenue to obtain, why should not the Post Office have it? Why should not the nation benefit?
The most important question is how to persuade people to change their old monetary habits. There are the joint stock banks. They make efforts to cater for the small depositor. The trustee savings banks have introduced their cheque scheme at Hull and South Shields. There is the Post Office Savings Bank, together with the constant appeals for saving, yet only half the wage earners are accustomed to the banking habit. The Wages Act has not been implemented to the extent that it might be.
In the giro system there is a possibility of doing an important thing for the people, namely, encouraging the banking habit to a greater extent. These are the factors which persuade me. I believe that giro is the one answer here. I know that the banks claim that their branch system has developed and that there is no need for an alternative system of money transfer. Why should not there be an alternative? I have already asked, as did the hon. Member for Devon, North, why there should not be a little competition. We cannot deny that the Post Office is already in the business for the small depositor. It was the forerunner. It has a large number of branch offices and sub-offices.
The hon. Member for Totnes came a little close to challenging the security of the services at sub-offices. I did not interrupt him at the time. I realised afterwards that this was not his intention. It was a question of speed. Sub-offices could cater for work of this kind. They could provide a service in villages. The Crown offices and the sub-offices cover every village and town. They are much closer to the people than are the banks. They would want to associate themselves with the giro system. The banks open from 10 a.m. to 3 p.m., when the small depositor cannot get there because he is

at work. Saturday is a half day in banking. There is already a suggestion that the banks should operate a five-day week. Post Office counters are open all day. This is the type of service which should be handed to the Post Office.
I see in the giro system a service at low cost, if the experience of other countries is any guide. It is a service which should save the costs of accounting, manpower, collection of rates, gas and electric light accounts, and distribution of wages. I see also an increase in savings. My view is that these add up to a service to our citizens and to the nation which would be very welcome at this time.

5.45 p.m.

Mr. Gordon Campbell: The hon. Member for Gateshead, West (Mr. Randall) has, with his great knowledge of and interest in postal matters, told us with clarity of the services which are available in post offices. Like him, I congratulate the hon. Member for Accrington (Mr. H. Hynd) on raising this subject because, although it has come up in the House before, it has not had devoted to it the time which is available today and which it deserves if the possibilities and advantages of and objections to such a system are to be examined. I listened to the Adjournment debate in March, 1963. I was well aware then of the caution which my hon. Friend the Member for Totnes (Mr. Mawby), the then Assistant Postmaster-General, expressed and the reasons for it.
My reason for taking part in this debate is that I have lived in a country with a giro system. When I was a diplomatist in Europe, I lived in the country which we have been told by the hon. Member for Accrington was the founder of the system, namely, Austria. I have made many payments by the giro system. I also took the opportunity of studying it and examining, simply as a matter of interest, its suitability and adaptability for this country. I find the system attractive, though I have been to some extent deterred by the suggestion of the hon. Member for Watford (Mr. Raphael Tuck) that this is a Socialist system. The large majority of the population in Europe which uses the system is not under Socialist government.
This system is needed by the countries in Europe and it is useful there, but they have very different banking and


other conditions. For historical reasons, our situation is not the same as that in those countries which have the giro system.
If sufficient support were forthcoming for the system, I would be in favour at first sight of its adoption. There is an alternative which has not been mentioned so far, namely, a combination with the banking system. I want first to examine the pros and cons of the system. I want to make some observations on its working as I saw it personally and used it on the Continent. Everybody can open an account and transfer money without actually handling cash. This is especially useful for those who have not bank accounts.
In Europe my impression has been that it is very largely used—here I confirm what was said by my hon. Friend the Member for Totnes—for paying bills by persons who have not got a giro account themselves. It is convenient for them to be able to pay several bills at one time at a post office. The creditor, whether it be a firm or an electricity board, sends a form with his bill which the debtor then takes to the post office and completes when the payment is made.
Hon Members have pointed out how convenient it is that there are so many post offices widely spread throughout the country and they have spoken of the convenience of the timing of their hours. Not only are they open for longer than the banks, but they are open at times which, on the whole, are more convenient to most people.
The system on the Continent is convenient to the firms which use it and the institutions, the gas or electricity boards or others with many accounts. This means that such institutions do not have to have offices with cashiers simply waiting for callers to arrive to pay bills and get receipts. On the Continent the system is cheap, but it depends on the patronage of many large accounts. It is the fact that many institutions use the system and leave fairly large deposits in it which enables the system to be run cheaply for all the customers using it. It is an essential element in such a system that it should be supported by a minimum number of institutions, large and medium sized, which can produce the base upon which a cheap system can be run.
We have rather different factors in the conditions in this country. First, four years ago the banks started their credit transfer system. I understand that a larger proportion of the population in this country has bank accounts compared with countries with giro systems. The reason is that once a giro system is in existence, bank accounts are not needed to the same extent. However, even with the credit transfer system a man who wants to pay in cash still has to go to a bank, which may be a considerable distance away, whereas there is probably a post office round the corner.
I understand that the Post Office has officially said that to start a giro system would cost about £4 million in capital expenditure. Perhaps the Postmaster-General will be able to comment on that. Experience in Europe has shown that the system is a cheap way of paying several bills at once, especially if the person paying wishes to do so in cash. Post offices are easily available and the giro system would do away with the separate addressing and so on now required by the present system of postal orders and registered post to different destinations.
Several hon. Members have mentioned the crime aspect. As the system would largely obviate sending money by post, it would remove the motive of many of the crimes concerning mail bags and against postmen.
The important subject of the payment of wages has also been mentioned. This is a vital consideration when the pros and cons of this scheme are considered. If it were to be found that the majority, or a large proportion, of wage earners was prepared to accept payment of wages through a giro account in the Post Office, or payment in cash over a post office counter, that would be an important factor in favour of the system; but I do not know, and I do not know how research can discover, whether that is so, and that may make all the difference as to whether this is a good scheme.
If most wage earners were prepared to use the system, that would probably have the effect of encouraging savings, as the hon. Member for Gateshead, West said, and the scheme would then have so much support that it would probably be efficient and worth putting into effect. We understand that the banks are now threatening that they may not be open on Saturday


mornings, and that would deprive many people of the opportunity of making payments at a time when post offices were open. The reverse of that medal is that the queues at post offices where there are now queues would need to be reduced, because we would not want them to be made worse by the new system.
All this leads me to believe that considerable market research is necessary before a scheme like this is adopted in this country. This market research would need to discover to what extent small accounts might be opened for the receipt of wages and to what extent—and this might be discovered through the trade unions—it would be acceptable for wages to be paid in this way. We would also have to know to what extent persons who had no intention of opening accounts would use the giro system for paying their bills through the Post Office.
Thirdly, and probably most important, we would have to discover whether there would be enough large account holders, institutions such as local authorities for rate paying, large shops, insurance companies collecting premiums, electricity, gas and other services and perhaps hire-purchase firms. Considerable market research would be required to make sure that a minimum number of such institutions would be prepared to support the system.
The other possibility which I should like to mention was put forward in an article in the Economist on 17th April. It was suggested that it would be perfectly feasible for the giro system to be combined with the banks' credit transfer system. I do not know all the technicalities, but it was put forward as a workable suggestion and the Government should certainly consider it. The banks might be apprehensive about the giro system, but if they are to threaten to shorten their own working hours and are worried about competition, it might be in their interests to enter such a scheme on the principle, "If you cannot beat them, join them". That is putting it in its crude form, but as the credit transfer system is already working, the suggestion of a combination of the two systems should be considered.
The Postmaster-General will probably tell us tint he is investigating this matter, or that his review is continuing. Perhaps he can make a statement this evening and

say that his review is complete. If he does make a statement, I hope that he will be able to say how much support by outside bodies he has been guaranteed before the system comes into operation. If he is still at the stage of considering the scheme—I know that he will want to look progressive, as the hon. Member for Accrington suggested—and if he is to make encouraging noises and to say that he is still investigating, some of his right hon. Friends will need to be brought in.
As I have indicated, the necessary inquiries will involve the Chancellor of the Exchequer and, probably, the President of the Board of Trade because of the institutions whose views will have to be sought. There will have to be inquiries of employers, commercial concerns and, probably, the trade unions. I was interested to note that, according to the hon. Member for Watford, the President of the Board of Trade has himself written a very favourable foreword to the book by Mr. Thomson about the giro system.
I am not able myself to judge what results research of this kind would produce. As the House will realise, having seen and lived with this system, I am attracted by it, but, in my view, it is important that we do not enter upon it here until we are certain that it will have the right measure of support. I hope that the right hon. Gentleman will tell us either what his present view about it is or that he will make a thorough investigation along the lines I have suggested.

6.0 p.m.

Mr. Dennis Hobden: This matter was debated in the House on 6th December, 1963. There is no question of introducing a new or as yet untried development in our monetary system. It is not a new idea at all. In fact, it goes back many years in other countries. It is quite a mature system and a thoroughly proved method of cheap and speedy transfer of money for those who are concerned with comparatively small sums, wage and salary earners, shopkeepers, and so on. It has been debated in the House many times and its outlines are well known.
The fact that the giro system is old and well tried prompts me to ask why we should still be discussing the possibility of its introduction and why it should


be a widely used and popular system in many countries while in this country it is still at the stage of being considered.
On 6th December, 1963, my right hon. and learned Friend the present Home Secretary made very persuasive representations for the introduction of the giro system, but the campaign for it goes back over half a century. There has been a great change of atmosphere within the Post Office. I call to mind the action of the Postmaster-General in 1912 in forbidding the then United Kingdom Postal Clerks Association, which was later merged with the Union of Post Office Workers, to conduct a public campaign in favour of introducing a postal cheque and giro system in the Post Office.
The attitude of the staff was that they wanted the Post Office to give the best possible service to the public and to keep abreast of all the latest developments. But they were forbidden to carry on, on the ground, apparently, that Post Office developments were the business of the Postmaster-General and his administration and the staff must keep in their proper place, without interfering.
In our own day, we have heard many complaints that workers are not interested in anything but pushing up wages and cutting hours. On 10th July this year, the Chairman of the National Board for Prices and Incomes said that Britain has suffered more than any other country from "the alienation of the worker from the purpose of industry and this meant that he had no interest in raising production". In this connection, it is instructive to remember that in 1912 it was the workers who wanted to improve their service to the public and the Postmaster-General who told them to mind their own business.
Things have changed a great deal since then on the administrative side of the Post Office. The Postmaster-General and his Post Office administration would certainly not now dissuade the staff from advocating what they thought to be a useful development. Those of us who have been associated with the Post Office over many years know that between both sides in the Post Office there is a tremendous movement for joint productivity effort, which, I am sure, my

right hon. Friend will mention in due course.
The Post Office staff associations are still interested in improving and developing their services, but still, after half a century, we have no postal cheque and giro system in this country. What are some of the reasons for this hold-up since 1912? If, in 1912, the Postmaster-General had had a different outlook and, instead of blocking this innovation, had tried it out, we should not now be wondering whether it was possible to have the giro system. It would have grown up with us and become an accepted institution in the Post Office. Moreover, the difficulties of introducing it at that time would have been less formidable than they are now.
At that time, the Post Office was regarded as a revenue-raising Department for the Chancellor of the Exchequer. We sometimes think that it still is today. But there was undoubtedly a reluctance to embark at that stage on an experiment which would have taken some time to introduce and about the profitability of which there might have been some doubt. But 1912 was also the time when the Post Office was engaged in taking over the telephone system, and the reason for that was the widespread complaints of business men and others about the quality of the service provided by the companies.

Mr. Deputy-Speaker: Order. The hon. Gentleman must not pursue that point about the telephone service. He has missed most of the debate, but he must still keep in order.

Mr. Hobden: I beg your pardon, Mr. Deputy Speaker. I was endeavouring to go back over the years to show why the giro system had not been introduced.
There was at that time massive opposition from the commercial banks to the idea of the Post Office Savings Bank entering, even on a limited scale, into competition with them, and the opposition of the banks continued right up to 1928 when a committee of the Post Office Advisory Council reported against introducing a postal cheque system on the continental model "at the present stage". However, it did recommend consideration of a system of limited cheques


available to Post Office Savings Bank depositors with adequate balances
as a means of testing the extent of the demand for cheque facilities among this section of the community".
Even that limited development was not introduced, although a partial approach had been made to it in the facility for a Post Office Savings Bank depositor to withdraw money by crossed warrant payable through a bank to a person specified by the depositor.
Coming more up to date with some of the objections which have been raised to the introduction of the giro system, the hon. Member for Totnes (Mr. Mawby), who was Assistant Postmaster-General at the time, raised several objections in the debate in 1963, though not, he said, as arguments against the usefulness of the giro system where it existed but as reasons for moving cautiously in the introduction of it in this country. He said that we ought to be extremely careful about it.
In 1959, the Radcliffe Report prefaced its recommendation that the possibility of introducing the giro system be investigated with the words,
… in the absence of an early move on the part of existing institutions to provide the services which will cater for the need we have in mind….
It is certainly true that the commercial banks have introduced a credit transfer system within recent months, but has it really developed in such a way and to such an extent as to make the introduction of a giro system into the Post Office unnecessary? One of the problems confronting the banks has been to get ordinary people in the lower income groups used to the introduction of the cheque transfer system, and the hon. Member for Totnes, a year or two ago, instanced as one of the difficulties of making giro practicable that many people are reluctant to make use of banking facilities, and that many of the workers who have gone over to payment of wages in a form other than cash want immediately to convert it into cash.
The hon. Member went on to say:
We are, therefore, confronted with the great problem of converting people to a system to which they have never been acustomed and which, at present, they are not prepared to accept."—[OFFICIAL REPORT, 6th December, 1963; Vol. 685, c. 1579.]

That was regarded as being a reasonable statement of the position at that time, but I do not believe that it is a problem which is insuperable and one which we should not make some attempts to solve now.
I gather that, in spite of reluctance, there are more and more workers whose wages are paid through the banking system. The Financial Times made reference to the position as far back as 10th July of this year and said that among office workers the cheque system through the banks continues to make good progress but that among the others it is proving a decidedly slow business. That was with reference to the Lombard Bank. That article is interesting because it gives the example of a firm, the Carborundum Company, which, by persistence, has got almost all of its factory employees to agree to take payment by transfer to accounts opened in their names. They have also agreed to take payment monthly. The firm saw the all-round advantage of the change-over and offered some "substantial financial inducement."
Clearly, we must not be put off by talk of the difficulty of getting people educated to the use of a new system which will be advantageous to them. The Lombard Bank has also mentioned another development. Some firms are now employing industrial security companies like Securicor to collect money from the bank, make up individual wage packets, and deliver them to the point of distribution. It is said that that practice is growing rapidly. It has obvious advantages in beating the wage bandits and takes some work off the companies' own shoulders, but it is admitted to be second best to the full use of the banking system for wage payments.
Undoubtedly, the case for and against regarding giro as practicable in this country turns largely on whether or not it is widely supported. The hon. Member for Totnes, when Assistant Postmaster-General, argued that a giro scheme has to pay for itself out of the excess deposits that can be invested and bring in revenue to cover the costs of its operation. He said that in his view, if any charge was made for the use of the service, it would immediately put it outside all prospects of consideration. It appears from that statement that the hon.


Gentleman thought we would need a depositor in the giro system to allow, say, £100 of his invested capital to be treated as non-interest bearing money so that he could use the giro transfer service
Mr. Thomson, in his book, "Giro Credit Transfer Systems", points out on page 31 that leaving deposits in a non-interest bearing account in order to use cheques is exactly what happens in any commercial bank and, in addition, the depositor pays for the chequing service. The hon. Member for Totnes also referred to continental experience, showing the impossibility of a central clearing service.
There are a few other points in favour of the introduction of the giro system. The shorter opening hours of the commercial banks compared with Post Office hours and the expected early move towards curtailing bank opening on Saturdays, is a point in favour of the introduction of the giro system, and a Post Office giro would offer a big competitive advantage as against bank cheque and credit transfer from this point of view.
In his Budget speech, the Chancellor of the Exchequer announced changes in Post Office savings banking consisting of a higher rate of interest, comparable with that paid on deposit accounts in commercial banks, for Post Office Savings Bank deposits above, say, £50, and subject to one month's notice of withdrawal. None of the details of the scheme has yet been worked out firmly, and it is not expected that the change will be ready until well into next year.
We now have to consider the position at which we have arrived today. In the debate that took place on 6th December, 1963, there were several references to the degree to which the door to the introduction of a giro system was or was not open. On 23rd July, 1963, the door was said to be just about the same as it had been in March, 1963. On 6th December, 1963, the hon. Member for Totnes said that his present view of the matter was that, if anything, the door was a little more closed than it was before.
Having regard to all these facts, as an ex-Post Office employee of about 30 years' standing, I believe that the time is long overdue for the introduction of the giro system which has been well

tried abroad, and I hope that we can hear from my right hon. Friend the Postmaster-General that at last we have reached the stage where we are to have some concrete proposals for the introduction of a giro system into our own Post Office.

6.17 p.m.

Mr. David Gibson-Watt: The hon. Member for Accrington (Mr. H. Hynd) is to be congratulated both on his fortune in obtaining a place in the Ballot and also on the way in which he opened this every interesting debate. These half-day private Members' debates come as a very welcome part of the debates in this Chamber and can well be described as a sort of calm between the storms.
The hon. Member's subject, the giro, is not a subject which is well known to hon. Members who are without experience of the Post Office, but the debate has not been lacking in hon. Members with experience in the Post Office who have risen, and they have given us the benefit of their views. I refer not only to the hon. Member for Brighton, Kemptown (Mr. Hobden) but to the hon. Member for Accrington and to the hon. Member for Gateshead, West (Mr. Randall), to whom we always listen with a great deal of interest.
The questions which have been asked today are, would this system be of benefit to the British public and is this a service which the Post Office should initiate to serve the public? As we have read, on the Continent variations of the system are freely used—and not only on the Continent but in Japan as well. We have been told all about the countries which have got the system, but we have not had any debate at all about the countries which, for various reasons, have not adopted it. It was my hon. Friend the Member for Moray and Nairn (Mr. G. Campbell), from who we heard one of the most interesting speeches, who himself had experience of using the giro system while he was on the Continent in a diplomatic capacity. I think that he was absolutely right when he said that if an economic case could be produced, then this was a matter into which market research should be undertaken.
It may well be that in replying to the debate the Postmaster-General will tell us that he has had market research undertaken and that as a result he has


taken certain decisions. If the Financial Times is anything to go by, we must note that in an article on page 11 we are told by "Lombard" about a
much-leaked announcement which the Postmaster-General is expected to make today about the Government having decided in principle to introduce a postal giro".
He says that this will be welcomed and goes on to argue the benefits of the G.P.O. and the banks joining forces.
I do not accuse the right hon. Gentleman of leaking this information. After all, this matter has been discussed in Post Office circles, as we were told by the hon. Member for Kemptown, since 1912. We have heard of the unholy alliance between the so-called political ancestors of the Liberal hon. Member for Devon, North (Mr. Thorpe) and the ancestors of the Postmaster-General who, for some reason, got together at that time in history, 50 years ago.
But I will not argue the case of 1912. I want to argue the case whether in 1965 in the present set-up, the commercial services which we have in Britain are adequate for the British public. Do they cover everybody? This is the heart of the problem. Is everybody covered in this country who wishes to make use of a transfer credit system? Do the banks cover the population's demand? The banks have come in for fairly heavy criticism from one or two hon. Members opposite. The hon. Member for Watford (Mr. Raphael Tuck) gave them a fair crack. They are very well able to look after themselves in all this, and I would only say in passing that any Government would be in a pretty bad way without the banking system of this country, and there are times when senior Ministers of every Government lean on them and ask their advice. But I am not here to protect the banks, which are very capable of protecting themselves.
As has been rightly said in the debate, nobody has ever advanced the giro system better or more compellingly than the late Member of the House, Mr. Will Williams. We all remember him as a friendly and well-loved Member. How much we miss him. Like others, he had had a long experience of the Post Office, and in September, 1959 he told us that the Director-General of the Post Office had informed the Post Office Department on the Whitley Council that the

matter was under close examination. As we know very well, we had the Report of the Radcliffe Commission which said:
We consider that, in the absence of an early move on the part of existing institutions to provide the services which will cater for the need we have in mind, there would be a case for investigating the possibility of instituting a 'giro' system to be operated by the Post Office.
After that we had the moves made by the joint stock banks and the history which followed.
Now we come to the very interesting book which has been written. The hon. Member for Watford had a slight advantage over other hon. Members in so far as the author of the book, Mr. F. P. Thomson, is one of his constituents. The hon. Member is, therefore, better briefed than we are. I have read the book. It is a very interesting book. It appealed to me from a purely humorous and political point of view to discover that the publishers in this country were the Pergamon Press, with which, as we know, the hon. Member for Buckingham (Mr. Maxwell) is closely connected, and to discover that in New York the publishers are the Macmillan Company. If I may say so, Mr. Thomson has chosen curious bedfellows.
It is an interesting book which has been described, I understand, by Mr. Thomson on the radio today. Someone said to me that it was all very well a person being allowed to put forward on the radio the case in favour of the giro, but why was no one put up to speak against it? But anyone who knows anything about broadcasting and television knows very well that to argue a negative is not news. What Mr. Thomson put forward has also been put forward in a good broadsheet which has come to my attention—again published by the Pergamon Press.
It seems to me that this idea of the giro has had a pretty good send-off. It is not often that one finds a book which shows that it has the rather doubtful benefit of the blessing of the present President of the Board of Trade in a foreword and one reads at the end of the broadsheet:
The Chancellor of the Exchequer, Mr. James Callaghan, has declared, 'I am in favour of extending the giro system in this country'".


Whether it is an advantage or not to have such backers, I would not say, but certainly this idea of launching the giro does not lack at all in public relations.
Be that as it may, we have to decide whether this is an economic, viable idea. Of course it has its attractions. My hon. Friend the Member for Totnes (Mr. Mawby), who has taken part in several debates on the subject and whose knowledge about it is considerable, says that the idea appears to be attractive, but he produced some important money figures concerned with carrying it out. It is said that if we are to have the giro system in this country we must have five million people prepared to put forward £100. This is the figure which I have been given, and no doubt the Postmaster-General, who has much greater facilities available to him, will correct me if I am wrong.
Indeed, if he has ideas about launching a giro system he may well be able to tell us what sort of support he envisages getting from business houses, insurance companies and others in the country. Let us make it certain that none of us on either side of the House wants to see the Exchequer losing a lot of money on a giro. When we talk about the Post Office losing a lot of money, we can be certain that that is one and the same thing. We must consider this point in considering the ability of the Post Office to run this scheme. My hon. Friend the Member for Moray and Nairn made a very good point when he said that in certain post offices there is a great deal of congestion. That must also be considered. Above all, let us recognise that we must have some backing from the business houses of the country if the scheme is to succeed.
I do not intend to speak at length, because a great deal has been said in informed debate upon it. I do not discard the arguments put forward today for the giro. I merely ask that in considering them—as they have been considered over the years—we should be absolutely certain that if such a system is introduced in this country it will be viable. I am sure the Postmaster-General will accept that one of the difficulties of carrying out an experiment on a regional basis is that the regions are not the

same. If a number of subscribers were required for a United Kingdom system we would get far fewer subscribers, and, therefore, they would have to subscribe more for a regional system experiment. Therefore, it is not easy just to make an experiment. If the system is to be carried out, it is a question of the Postmaster-General diving in at the deep end.
I hope that the Postmaster-General will tell us what his thoughts are and what he thinks about suggestions put forward in both the Economist and the Financial Times of 21st July for some sort of co-operation between the Post Office and the banks on the giro system.

Mr. Robert Maxwell: I must declare my interest as the publisher of the book to which reference has been made. I am grateful for the kind remarks. Would the hon. Gentleman be more positive about the giro? Will he hear the three considerations which prompted me to publish this book? First, Mr. Thomson had devoted a lifetime's effort to it and he could not find anybody in this country to publish it for him. I was very impressed with his argument, and as a businessman I felt certain that I should like to use the giro myself. Secondly, I believe that the giro will reduce by about 90 per cent. the hit-and-run raids on cashiers. Thirdly, I believe that it would increase the efficient use of resources in the United Kingdom and thereby help our modernisation. In these circumstances, I wonder whether a warmer welcome for the scheme might be forthcoming from the Opposition.

Mr. Gibson-Watt: I never like to be accused of being lacking in warmth, but if the hon. Gentleman had been here during the debate—no doubt he has been kept elsewhere—he would have heard the arguments put forward by hon. Members on both sides of the House and the very strong arguments put forward on his second point, namely, the increase in smash-and-grab raids and the increasing danger of carrying money in vans. I agree with him over that point.
I hope that it does not appear that my speech is praising the giro system with faint damns. That is not what I intend to do. All that I am saying,


speaking for the Opposition, is that it is for the Government to say, as it would have been for the Conservative Government to say some months ago, what their views are. I still advance the contention that if we are to have the giro system we should have the market research asked for by my hon. Friend the Member for Moray and Nairn and some idea that the system can be successful and will carry out what its protagonists and those who support it want. We should know whether it is viable and can do a real job as it has done in other countries on the Continent.
We look forward to hearing from the Postmaster-General whether he and the Government favour the giro system and whether they intend to carry it out.

6.34 p.m.

The Postmaster-General (Mr. Anthony Wedgwood Benn): I join the hon. Member for Hereford (Mr. Gibson-Watt) in welcoming the opportunity to debate this matter. This has been a remarkable debate, for many reasons, first, because of the very serious contributions made by all those who have taken part in it and because of the near unanimity of support for the idea of a giro if it is a practicable operation.
I congratulate my hon. Friend the Member for Accrington (Mr. H. Hynd) on his luck in winning the Ballot, on his wisdom in choosing this subject and on the skill of his speech. I congratulate, also, the hon. Member for Totnes (Mr. Mawby), who, I hoped, would speak in the debate and whose speech was of great interest. He looked back on his maiden speech as a Minister. In mature retirement he will realise that today's speech was better than the one which he made when, as a maiden ravished by the Treasury, he was doubtful about the giro.
My hon. Friend the Member for Watford (Mr. Raphael Tuck) paid tribute to an illustrious constituent, Mr. Thomson, who will be remembered not for having thought of the scheme—for it is an old idea—but for having worked extremely hard to get people to understand what the giro can offer.
The hon. Member for Devon, North (Mr. Thorpe) went so far as to suggest that it should be called "Benn's Bank".

This is a very attractive idea, but it would not give any special facilities to me. If I write a cheque "Pay the Postmaster-General", I am not allowed to cash it myself. But although these are attractive thoughts, they do not bear very much on the discussion.
My hon. Friends the Members for Gateshead, West (Mr. Randall) and Brighton, Kemptown (Mr. Hobden) spoke on behalf of the Post Office workers who have long been interested in the giro. The hon. Member for Moray and Nairn (Mr. G. Campbell) saw it as a consumer in another country.
This matter has a very long history. Reference was made to the possibility of a leak. That is a difficult exercise if one has been engaged for 40 years and is contemplating matrimony. These arguments have been going on for a long time. What the House wants to know is whether this is a practicable scheme.
The last Government considered the matter very carefully. Mr. Bevins made a speech to sub-postmasters in which he gave a broad hint of his own views. But the previous Government came to the conclusion in the speeches referred to in the debate that the giro was not practicable. I thought at the time that they were rather pessimistic about the likely outcome of a giro scheme, that they were unduly confident that the existing banking services could be extended to all those who did not have bank accounts and that they were a little negative in their approach.
One of the first things which I did on taking office was to commission a fresh study of the giro as a possibility. This has been done with very great thoroughness. Further visits were made to Europe to study the latest experience there. Up-to-date surveys were made of the need and the prospects. The review revealed certain new factors which led us to consider the matter in a more favourable light than the last Government had done.
The first thing which came to light was the growing need for certain sorts of services not provided by the present remittance services of the Post Office or the money transmission facilities in this country. For example, over the last seven years, the mail order business has doubled in size. This is a clear indication of the


need for some means by which remittances on this scale can be made available. Secondly, instalment payments, which are very important, have doubled in the last four years. Both these things are likely to increase still further. Turning to credit shopping, there is the renting of durable consumer goods, like television sets.
All these are things which have developed very greatly in this country. At the moment, people deal with them very often by cash payments in local offices or by postal orders or money orders, which are very old-fashioned and extremely expensive ways of transmitting money. This is done by people who do not have bank accounts. It is not a question whether the bank can offer its customers improved facilities, although that is something which naturally everybody welcomes. The question is what should be done about people who do not have joint stock bank current accounts. At any rate, as a result of our survey of the need, we came to the conclusion that the financial prospects for a giro were very much improved.
The question of market research has, very properly, been raised. What the Post Office is considering is this: can we modernise our existing remittance services? If so, in what way should we modernise them? If we modernise them in a certain way, what price would we have to charge and what is the potential demand?
I can only tell the House that on our basis of calculation at the moment it would be possible not just to break even, but to get an 8 per cent. return over the long run on a giro system with as few as 1¼ million giro account holders with an average balance of only between £100 and £150. All I can say about that is that if we compare those very cautious assumptions with the experience on the Continent we shall realise that assumptions of this kind really are more than reasonable.
For example, in France there are over 5 million giro accounts with an average balance not of £100 or £150, as we estimate here would be necessary, but nearly £400. Of course, the new giro accounts which one would expect would be divided, naturally, between institutional accounts, where the average balance would be very

high, and the individual accounts where the average would be very much smaller, but what happens is that while one person's account goes down another person's account goes up, and money circulates, and as little money as possible, one hopes, leaves the system.
So it should be attractive for these new customers. When one considers their possible number one is encouraged by the prospects. Moreover, we can now contemplate automation at the outset, with very great advantage in terms of cost.
As the result of this survey the Government have decided that a Post Office giro, offering the same basic facilities as the European giro, would be a useful addition to the means of transmitting money, to the normal Post Office remittance services which have been more or less unchanged since 1881, and it would provide a cheap and efficient service for those without normal banking facilities who do not want the full range of services offered by joint stock banks.
Having said that may I come on, very briefly, since this has been dealt with by other speakers, to what the giro offers. It is really a very simple current account facility without the capacity to have overdrafts and without any interest payment or without any of the normal advisory services, some of which are highly sophisticated, offered by the banks. It consists of a very simple central clearing office where the accounts for the giro are kept and where all transactions are recorded. It is available to anybody or any institution wanting to open an account.
The system offers a transfer service from account holder to account holder which is accompanied in the case of the continental giro and would be here by a written note specifying for what purpose the money is transmitted—which is a very great advantage over, for example, the postal order. What would happen would be that this transfer slip would be sent to the giro office, which would send a debit to the man who made the payment and credit the man to whom the payment has gone and a note saying for what the payment was intended. It is an exceptionally simple and straightforward system which we contemplate would be free and without any charge whatsoever.
The next service is a deposit facility for putting money into the giro. This would be either by cash on one's own account or by a payment on a giro account at post offices where there would be a charge made, but a charge which would compare very favourably indeed with other charges made for other means of remittances or other remittance services, a charge of 9d.
Then there is, of course, the payment facility, either payment to oneself, which, in effect, is writing a cheque on one's own account. In certain offices there will be facilities available for up to £20 on demand, if one can establish one's identity, and that facility would be free of charge; and there will be facilities for a warrant which is cashable at a charge of 9d. plus whatever stamp duty is necessary.
Since the central office could be fully automated from the outset we should be able to have a 24-hour clearance service, which is very rapid indeed. We believe that the benefits accruing from the introduction of the giro would be widely welcomed, and not only by postmasters, of whom there are 23,000, including sub-postmasters. It is not only the postal unions who are interested in this but also the Federation of Sub-Postmasters.
Post offices are open all day and every day, including Saturdays, which is intensely important to those people who would be the likely users of the giro service, including, of course, the Post Office Savings Bank, with its 22 million people with live accounts. It will be simple, it will be quick, it will be economical. It will provide a regular record of balances and very easy bookkeeping. It would introduce what must be of concern to anyone in the Post Office, a safety factor.
Also, it would mean economy of manpower not only from the point of view of remittance services which will benefit by this, but, also, one can visualise the community as a whole benefiting greatly by virtue of the fact that the collection of money would be so much easier.
Who will actually use it? Most examples have been given to the House already—public utilities, mail order firms, charities, a very substantial number of business firms; almost anybody receiving large numbers of remittances will be interested in the service which

the giro will offer. Indeed, we have an example—I cannot give the name to the House—of a very large enterprise indeed in this country which deals with tens of thousands of retailers with hundreds of millions of pounds going through its hands in the course of a year, and it expressed a positive interest in the giro because of the advantages which it would give to that enterprise, as it would to small businesses and to all the people who are required to make payments on a regular basis.
One can visualise the case of the ordinary insurance agent who is going round collecting money and who is responsible for dealing with a great deal of money. By means of the giro it will be possible for him to go into a post office and make out his payment to his office in this way, without the difficulty which he now has of taking it home and hiding it in a sock or putting it under the bed and hoping that burglars will not come to take it away.
One of my jobs is to present bravery awards to sub-postmasters and others who have been attacked by thugs, and some of the stories they tell are really quite hair raising, and anything we can do to make the transmission of money more secure will be of advantage to the community as a whole.
I come to the next question, which is, relations with the joint stock banks. I am very grateful that this point has been raised because it is, of course, very important indeed. We believe that the giro will be popular with those without bank accounts, of whom there are very large numbers, of course—an overall majority in this country. Hence the giro will, in terms of the individual, be moving into a more or less untapped market from the banks' point of view, and it will be replacing in this respect the existing Post Office remittance services.
This is the point I made earlier in respect of market research and a point made by the hon. Gentleman the Member for Moray and Nairn. We contemplate this as a modernisation of our own remittance services, and it follows from this that we see the giro as complementing the banking services and not replacing them. Having said that, it is quite clear that there must be links between the giro and the banks from the point of


view of the national interest. If the nation is to have a comprehensive, modern, money transmission system, there must be quick and easy transfers between giro accounts and ordinary bank accounts, and I am confident that satisfactory arrangements with the banks will be reached on for direct transfers between bank accounts and giro accounts, and vice versa.
I very much hope that we shall also be able to reach agreement on another important point, namely, the compatibility in design of bank and giro forms, because what we are concerned with here is a national system which meets the requirements of a wide variety of people. I intend to initiate early discussions with the banks to consider arrangements for co-operation.

Mr. Maxwell: When discussing the question of the forms with the joint stock banks, will my right hon. Friend also bear in mind the need to use the same computer language? This will obviously be computerised, and it is, therefore, necessary that the language should be compatible.

Mr. Benn: I shall come to the computer technology aspect of the matter, but I am grateful to my hon. Friend for raising it, because compatibility now means computer compatibility when one is discussing an operation as complex as this. I might add that, obviously, the giro accounts will permit the transfer of money to and from Post Office Savings Bank accounts, although, as we see it, the giro will be organised separately from the savings bank from an administrative point of view.
I turn now to the setting up of the giro service, which is a major operation, but an operation which I believe the Post Office will be able to carry out very well. It requires the establishment of a central office, a giro clearing office, which will have to cope with hundreds of thousands of transactions during a working day. It will be a big organisation, and it will have the most modern automatic data processing service from the very beginning.
As it happens, this is one of the benefits that will have come from delay, because there will not have to be the transfer from manual operation to computer

operation. Anyone who has seen the old manual methods by which the Post Office Savings Bank now handles deposits and withdrawals, and which are being computerised, will know what a blessing it is to avoid the slave labour associated with the simple operation of paperwork.
It will require a large building, and it will require the acquisition of several computers. But, as the House knows, the Post Office is one of the largest, if not the largest, operators of computers in Europe. Recently, we put in an order for £2½ million worth of computers, five more British ones, for dealing with our telephone management statistics and other associated operations. Computers are really moving into the Post Office, and we are very familiar with their use.
We estimate that about 3,000 people will be necessary to run this service, which is very much fewer than had been estimated earlier. If we are to offer a 24-hour service, it has to be near a railway centre, which will make possible the speedy transfer of giro letters from and to all parts of the country. This means that it has to be near Crewe, and indicates Merseyside for the giro centre, which will have the advantage also of conforming with the general policy of dispersing out of London and of providing regional vitality in terms of Government enterprise.
Figures have been given of £4 million to £5 million capital cost spread over five to six years, with operating costs estimated at, say, £15 million, which will be financed partly by the interest on the money we would hold while it is in transit, and partly by the charges made.
We are as confident as we can be in the circumstances, and we are assisted in this by the Treasury, whose confidence is always of a granite kind, that it will be possible to achieve a return on a giro service. To sum up, I would say that the Government are convinced that they would be offering cheap and speedy facilities to meet a real need not met by existing facilities. It is on this basis that we make this announcement to the House.

Mr. H. Hynd: Is my right hon. Friend contemplating an international link-up, as there is in Europe?

Mr. Benn: There are giro arrangements between the European countries with


giros. I have not dealt with this, because it is rather outside the immediate terms of reference of the debate, but it follows that if we have a really good, modern, internal giro system, which is compatible with the banking system, and parallel with the European ones working with each other, we shall be in a position to facilitate international payments. This is one of the points that Mr. Thomson mentions in his book.
A White Paper will be published in due course which will provide further information for the House and for the country. I believe that the joint stock banks and giros together will provide the best possible joint system of money transmission for modern needs. This is many years after I would have liked to have seen it happen, but it is not too late to be of real benefit to us all.
During the debate on the Post Office, in March of this year, I described the Post Office as a "Ministry of Communications". In this sense banking is a natural part of such a Ministry because, as everybody knows, credit is a matter of information, and the passing of pennies, half pennies and £1 notes, or any physical form of cash, is an old-fashioned idea for the transmission of money. Very rich people never carry any money with them, because their reputation goes in advance. Nobody would dream of asking them for the money for the evening paper. On the other hand, as Oscar Wilde said, the poor, who need money most, have least of it.
The truth about the transmission of money is that it is largely a question of spreading the good news that a man is rich, or concealing as far as possible the bad news that he is poor. In fact, the giro offers improved facilities for spreading the news of the credit-worthiness of a man, or of an industry, or of a firm, through, in this case, electronic processes. It is in this way that the giro naturally fits into the concept that I at any rate have of the Post Office as a "Ministry of Communications".
This is a great step forward. It is a notable addition to Post Office services and to public enterprise which I should like to see meet the needs of the community. If it can do so it will boost computer technology in this country, and

will lead to a demand for more computers. It will meet the sophisticated needs of a modern society, and I am glad that exactly 100 years after the Post Office Savings Bank was introduced by Mr. Gladstone we are, in this year, seeing two new developments: first, the investment allowances announced by the Chancellor of the Exchequer in his Budget speech which come within the responsibility of the Savings Bank; and, secondly, the giro itself.
I hope, therefore, that the House will endorse the Motion, so ably moved by my hon. Friend the Member for Accrington, and give us the go-ahead to get on with the job.

6.58 p.m.

Mr. Robert Cooke: For once the Postmaster-General has come to the House with optimism in his heart, and we welcome the fact that in due course we shall be seeing a great new public service, but he has not told the House when the public are to enjoy this service. We have heard that in due course there is to be a White Paper. There have been other White Papers on other subjects. The right hon. Gentleman might have been a little more frank and specific. We welcome the idea and give it our approval if it can be made to work, but we have always said that we would like to know when the public are to enjoy this service.
There has been a good deal of kite flying leakages in the Press during the last few days.

Mr. Maxwell: Nonsense.

Mr. Cooke: The hon. Gentleman says "Nonsense", but the Press has been full of it for the last week, notably the Bristol Press, which has been in close touch with the right hon. Gentleman, and the public have come to expect something as a result of this debate.

Mr. Benn: The hon. Gentleman ought to be more careful. I have spoken to no journalists whatsoever about the Government's intentions on the giro. This is a matter of great public interest. If he is implying that I anticipated the statement that I made today when speaking to any journalists, I would be grateful if he would withdraw it immediately.

Hon. Members: Withdraw.

Mr. Cooke: I am not suggesting that, and I am sorry that the right hon. Gentleman took it that way. I said that some newspapers seemed to know a good deal about it. At any rate, there has been a good deal of anticipation about the outcome of the debate. The point is that the right hon. Gentleman has not told the House and the public when we are to enjoy this new service. We are to have a White Paper. The Government approve of the service, but we do not know when we shall get it.

Mr. H. Hynd: rose in his place and claimed to move, That the Question now be put.

Question, That the Question be now put, put and agreed to.

Question put accordingly and agreed to.

Resolved,
That this House would welcome the establishment of a postal giro service in the United Kingdom offering similar facilities to those given by postal giro systems in other countries.

Orders of the Day — SIR WINSTON CHURCHILL (MEMORIALS)

Resolution reported,
That an humble Address be presented to Her Majesty, praying that Her Majesty will direct that memorials be constructed to the memory of the late right honourable Sir Winston Churchill, K.G., and to assure Her Majesty that this House will make good the expense attending the same.

Resolution agreed to.

Address to be presented by Privy Councillors or Members of Her Majesty's Household.

Orders of the Day — REDUNDANCY PAYMENTS [MONEY] (No. 2)

Resolution reported,
That, for the purposes of any Act of the present Session to provide for the making by employers of payments to employees in respect of redundancy, to establish a Redundancy Fund and to require employers to pay contributions towards that fund and to enable sums to be paid into that fund out of the Consolidated Fund, it is expedient to authorise the issue out of the Consolidated Fund or raising by borrowing of such sums as may be required to be so issued or raised in consequence of any provision of the said Act of the present Session whereby, subject to a limit of £20 million on the aggregate amount outstanding by way of principal in respect of the advances, the Treasury may make advances out of the Consolidated Fund to the Minister of Labour for the purposes of the Redundancy Fund.

Resolution agreed to.

Orders of the Day — REDUNDANCY PAYMENTS BILL

As amended (in the Standing Committee), considered.

Orders of the Day — New Clause.—(STRIKE DURING CURRENCY OF EMPLOYER'S NOTICE TO TERMINATE CONTRACT.)

(1) The provisions of this section shall have effect where, after an employer has given notice to an employee to terminate his contract of employment (in this section referred to as a "notice of termination")—

(a) the employee begins to take part in a strike of employees of the employer, and
(b) the employer serves on him a notice in writing (in this section referred to as a "notice of extension") requesting him to


agree to extend the contract of employment beyond the time of expiry by an additional period comprising as many available days as the number of working days lost by striking (in this section referred to as "the proposed period of extension").

(2) A notice of extension shall indicate the reasons for which the employer makes the request contained in the notice, and shall state that unless either—

(a) the employee complies with the request, or
(b) the employer is satisfied that, in consequence of sickness, injury or otherwise, he is unable to comply with it, or that (not-withstanding that he is able to comply with it) in the circumstances it is reasonable for him not to do so.

the employer will contest any liability to pay him a redundancy payment in respect of the dismissal effected by the notice of termination.

(3) For the purposes of this section an employee shall be taken to comply with the request contained in a notice of extension if, but only if, on each available day within the proposed period of extension, he attends at his proper or usual place of work and is ready and willing to work, whether he has signified his agreement to the request in any other way or not.

(4) Where an employee on whom a notice of extension has been served—

(a) complies with the request contained in the notice, or
(b) does not comply with it, but attends at his proper or usual place of work and is ready and willing to work on one or more (but not all) of the available days within the proposed period of extension.

the notice of termination shall have effect, and shall be deemed at all material times to have had effect, as if the period specified in it had (in a case falling within paragraph (a) of this subsection) been extended beyond the time of expiry by an additional period equal to the proposed period of extension or (in a case falling within paragraph (b) of this subsection) had been extended beyond the time of expiry up to the end of the day (or, if more than one, the last of the days) on which he so attends and is ready and willing to work; and section 2 of, and Schedule 2 to, the Contracts of Employment Act 1963 shall apply accordingly as if the period of notice required by section 1 (1) of that Act were extended to a corresponding extent.

(5) Subject to the next following subsection, if an employee on whom a notice of extension is served in pursuance of subsection (1) of this section does not comply with the request contained in the notice, he shall not be entitled to a redundancy payment by reason of the dismissal effected by the notice of termination, unless the employer agrees to pay such a payment to him notwithstanding that the request has not been complied with.

(6) Where a notice of extension has been served, and on a reference to a tribunal it appears to the tribunal that the employee has not complied with the request contained in

the notice and the employer has not agreed to pay a redundancy payment in respect of the dismissal in question, but that the employee was unable to comply with the request, or it was reasonable for him not to comply with it, as mentioned in subsection (2)(b) of this section, the tribunal may determine that the employer shall be liable to pay to the employee—

(a) the whole of any redundancy payment to which the employee would have been entitled apart from the last preceding sub-subsection, or
(b) such part of any such redundancy payment as the tribunal thinks fit.

(7) The service of a notice of extension, and any extension, by virtue of subsection (4) of this section, of the period specified in a notice of termination,—

(a) shall not affect any right either of the employer or of the employee to terminate the contract of employment (whether before, at or after the time of expiry) by a further notice or without notice, and
(b) shall not affect the operation of Part I of this Act in relation to any such termination of the contract of employment.

(8) In this section any reference to the number of working days lost by striking is a reference to the number of working days in the period beginning with the date of service of the notice of termination and ending with the time of expiry which are days on which the employee in question takes part in a strike of employees of the employer.

(9) In this section "time of expiry", in relation to a notice of termination, means the time at which the notice would expire apart from this section, "working day", in relation to an employee, means a day on which, in accordance with his contract of employment, he is normally required to work, "available day", in relation to an employee, means a working day beginning at or after the time of expiry which is a day on which he is not taking part in a strike of employees of the employer, and "available day within the proposed period of extension" means an available day which begins before the end of that period.—[Mr. Thornton.]

Brought up, and read the First time.

7.1 p.m.

The Joint Parliamentary Secretary to the Ministry of Labour (Mr. Ernest Thornton): I beg to move, That the Clause be read a Second time.
I think that it would be convenient, Mr. Speaker, if, with this new Clause, we discussed Amendment No. 71 and Amendment No. 74, both to Clause 40, and Amendment No. 79, to Clause 49.

Mr. Speaker: If the House so desires. So be it.

Mr. Thornton: The new Clause fulfils an undertaking which I gave in Committee and introduces a provision which


both sides of the Committee thought desirable. The loophole in the Bill which the new Clause removes was that previously, under Clause 10(1), it would have been possible for workers to go on strike as soon as they received notice, stay on strike until the expiry of their notice and still collect their redundancy payments. It was generally accepted in Committee that there should be some safeguard for the employer. The employer, for instance, might have to finish off work on a certain order, and it was felt that in such circumstances Clause 10(1) might operate very unfairly against him.
Hon. Members opposite suggested that an employer should be able to extend the original notice of termination in such circumstances by as many days as the worker had spent on strike, and the right hon. Member for Grantham (Mr. Godber) suggested a form of words which might be considered. My right hon. Friend has considered the form of words suggested by the right hon. Gentleman and we have embodied this basic idea of an extension of the notice in the Clause.
We believe, however, that it would be going too far to give an employer power to extend the notice unconditionally and unilaterally. There might be circumstances where it was reasonable for the worker to refuse to return to work beyond the period of the original notice. For instance, on the strength of the original notice a worker may have arranged to sell his house and move to another area. It would also be a serious departure from the existing legal position to empower an employer to suspend a notice unilaterally. The new Clause, therefore, provides that the employer may request a worker's agreement to extend the period of notice by the number of days lost through the strike action. Only if the worker unreasonably refuses to agree to this request does he lose his entitlement to redundancy payment.
I should like to outline the way in which the new Clause works. In order to comply with the employers' request for an extension of notice the worker must report for work and be ready and willing to work on as many days after the expiry of the original notice as had been lost through strike during the period of that original notice.
By virtue of subsection (8) it is immaterial whether there has been only one strike during that period, or more than one; a single notice of extension by the employer will suffice. On every day when the worker reports for work, as requested in the notice of extension, subsection (4) provides that the contract of employment shall be extended accordingly, so that contractual relations between the employer and the worker are just the same as during a normal period of notice.
Subsection (5) provides that the worker who does not comply with the employer's request, that is, either does not report back for work at all or does not report for the required number of days, shall not be entitled to payment unless the employer agrees to pay him notwithstanding his non-compliance. But, by subsection (6), the employee may appeal to a tribunal if the employer does not agree to pay him. If the tribunal finds that the worker was unable to comply—for example, because he was sick, or because it was otherwise reasonable for him not to comply, as in the example I gave a few moments ago, in which the man had sold his house and had had to move to a new district—the tribunal may award the employee part of the redundancy payment, or the whole of it, or none at all. This is a reasonable and necessary safeguard.
One would hope that the situation to which the new Clause relates will not arise very often. But I suggest that this procedure for serving a notice of extension is a necessary and entirely reasonable safeguard and that it adequately meets the problem which we all agree exists under the terms of the Bill as it stands.

Mr. Ronald Bell: Can the Minister elucidate one point? At the moment, if the employee who is dismissed loses eight days, say, through a strike, and then, in accordance with one of these notices, turns up and is available for work on seven days but not on the eighth, and has not a reasonable excuse for not being there on the eighth, it seems to me that that case cannot even go to the tribunal. There cannot even be a partial allowance of the redundancy payment; the worker loses the lot. Perhaps that is right, but am I right in that understanding?

Mr. Thornton: I am grateful to the hon. Member for giving me an indication, otherwise I might not have been able to answer the question. As I understand it, the position is covered by subsection (3), which provides that an employee complies with the terms of the notice of extension
only if, on each available day within the proposed period of extension, he attends at his proper or usual place of work.
Subsection (4,b) merely maintains the contractual relationship between the employer and the employee. That is my advice. Subsection (5) makes it quite clear that the worker must attend upon every day in order to be entitled to the redundancy payment. If he does not attend every day he is disentitled, and his only recourse then is through the tribunal. I hope that what I have said clears up the point in question.

Mr. J. B. Godber: We are grateful to the hon. Member for explaining the new Clause. We appreciate the reason why his right hon. Friend cannot be here at the beginning of our discussions. We know the difficult problems confronting him. We wish him well in dealing with those, and hope to see him back with us before we have completed our deliberations tonight. How long that will take we do not know, but there is a great deal in these new Clauses, and this one is an indication of one of the difficulties which confronted us in our earlier proceedings.
It may seem somewhat churlish to make criticisms like that now, because the Government have tried to meet us on a number of these issues. They have seen the error of their ways in regard to some of the bad drafting in the Bill and that is the reason why we have this massive array of new Clauses and Amendments. However, if we have been able to put them on the right lines, we are very happy.
This new Clause, as the hon. Gentleman said, follows up an undertaking given in Committee and an important point is now covered. It is true that the Government were not able to accept my suggested form of words. My form was much shorter than the form of the Parliamentary draftsman, but that is normal in these matters. I have tried to follow the explanations which the hon.

Gentleman gave of this new Clause and particularly in relation to the point raised by my hon. Friend the Member for Buckinghamshire, South (Mr. Ronald Bell). In continuation of the point which my hon. Friend raised, I am not certain that the explanation which the hon. Gentleman gave covers it, in that, if a worker failed just for one day to turn up for the additional time allowed to him, he may be debarred from consideration even by the tribunal for redundancy payments. This may apply if he fell outside any of the conditions laid down in the new Clause.
It is for consideration whether the Government would like to look at this between now and the consideration of the Bill in another place, to see whether there ought to be some slight amendment here to take account of the position of a worker who fails in this way to qualify and whether there ought to be more opportunity for a tribunal to determine the case. The hon. Gentleman would agree—

Mr. Thornton: I am advised that if, in the case the hon. Gentleman referred to, a man fulfilled his obligation, agreed to the request for the benefits of extension and attended every day but one after the strike for the number of days which he was on strike, he would have recourse to the tribunal. Under the terms of the Clause, he would certainly, in those circumstances, get a favourable award from the tribunal.

Mr. Godber: I am glad to have the assurance which the hon. Gentleman gives me. My hon. Friend the Member for Buckinghamshire, South, who understands the wording of these things better than I, takes the view that a man would be penalised unless he could show that it was reasonable and proper for him to be away. I suggest to the Parliamentary Secretary that he might check on this to make sure that it is adequately covered. The general wish of hon. Members, I am sure, would be that the tribunal should decide in these cases.
We took the view all along that if a strike took place it was right and proper that a man should work out his terminal of days after the strike was over. The Government have met us on this. We do not want to pursue this further so that the man is penalised over some petty


matter. I think that the House would agree on this. I hope that the Government will check on this point. Subject to that, I welcome the new Clause.

Mr. Thornton: I give the undertaking that we will look at this again. I cannot let pass unchallenged the strictures which the right hon. Gentleman placed on us for producing a badly drafted Bill. We are dealing here with matters related to the Contracts of Employment Act; we are breaking new ground in industrial legislation and establishing a new relationship between employer and worker on a financial basis. I have gone to the trouble of finding out what happened when the Contracts of Employment Act was debated. It was a 10-Clause Bill with two Schedules. This is a 60-Clause Bill with several Schedules. The previous Government put down 30 Government Amendments, covering nine pages. If we had equalled that record proportionately—we must agree that this is a much more complex problem with which to deal, a central problem of redundancy payments, than was the Contracts of Employment Act—we should have run to about 60 pages of Amendments, about 180 Amendments, compared with the 100 which we have. Our average performance bears very good comparison with that of the party opposite when they were in Government.

Mr. Ronald Bell: Does not the hon. Gentleman's arithmetic proceed from a false premise? He has called this a 60-Clause Bill. It started out as a 47-Clause Bill and the Government have added 13 Clauses.

7.15 p.m.

Mr. Leslie Hale: I rise, with my customary diffidence, to intervene in this duologue. I was disarmed by the presence at the Dispatch Box of my hon. Friend the Joint Parliamentary Secretary, because I was thinking of saying something about the interests of cotton workers in this matter. The report of the Card Loom Association for the last week or two discloses a further diminution in employment of over 1,000, mostly, according to the report, people of long service. Once again it looks as if legislation will be passed too late for the principal sufferers in my division to get any benefit. My hon. Friend will

recall what happened to cotton workers' compensation. I realise that, in this Clause, the Parliamentary draftsmen have sought, in their mysterious way, to try to deal with what one would have thought was a fairly simple point. I should have dealt with it in the old tradition of our Lord, by saying, "Let justice be done".
This will be taken to a great tribunal. I remember vaguely from an alleged biography of Lord Goddard—an excellent book but not much of a biography of Lord Goddard—a reference to Lord Goddard being called upon to consider an amendment of the Control of Tins Cans Kegs Drums and Packaging Pails (No. 10) Order 1943, amending the Control of Tins Cans Kegs Drums and Packaging Pails (No. 9) Order 1943, which amended the Control of Tins Cans Kegs Drums and Packaging Pails (No. 8) Order 1942, and so on. His Lordship expressed himself forthrightly—I am sure judicially—about this, because the explanatory note of the Order meant that tins can now be used for enclosing amounts of tobacco up to 2 ozs.
There are 73 lines in this Clause. With his experience of Lancashire, my hon. Friend will agree that Lancashire is a rather special place. What is more, Lancashire put this Government in office, and, at the moment, is not very happy—[Interruption.] The time has come when one must speak plainly. If I spoke as plainly as I should like, I might get myself beyond the ambit of this limited discussion. If I say to a constituent of mine—we all know what it means—"You are one of the chaps who has notice and although your pals are on strike and you want to be loyal, they will understand and the trade union will understand that, in order to protect your right to redundancy compensation, you must, whatever your wishes, present yourself for work on the day following the expiry of your notice and go through this claptrap day by day until the strike ends. The union will understand"—

Mr. Thornton: I think that my hon. Friend has misunderstood the purpose of the Clause. It is an extension of the notice for as long as the strike continues and the worker will be required to attend at work after the strike has finished and to work through the period of notice, including the days he was on strike.

Mr. Hale: But he has had his notice. I understand the problem with which we are trying to deal. I know that it is a problem. I think it much more simple to say, or, if one has a tribunal which one can trust, for it to say, "Let justice be done." We know that there are legal snags here—but 73 lines in one Clause! I know that the trade unions will master it and devise the forms and will be able to advise the workers, but if a worker came to me from Oldham with its background and its reputation and I said that he had to go through all this, he would say, "Mr. Hale, it is not honest to have this sort of postponement of obligations, to have this suspension. I wish I had not to do it." I expect that he would do it, but it is a lamentable sort of contrivance, even if it were necessary.
We are really very concerned about the position in Oldham. I am still waiting to know whether anything is to be done about byssinosis, but to pursue that matter now would be out of order. However, while waiting for that, I propose to call attention to the situation in Oldham and to say that the time has come when something should be done for my constituents as well as for the farmers.
I am having difficulties with the aircraft industry, with Ferranti's, with the cotton industry and with people who are still waiting to get mortgages. If the House is to turn down my byssinosis Bill as well, I shall have to take the advice of my psychiatrist, who has told me, in dealing with my perpetual insomnia, that I should use the long nights in this place in the exercise of some useful activity. I shall try to get back and constitute myself an elder statesman and give the benefit of my advice to the House more frequently.

Question put and agreed to.

Clause read a Second time and added to the Bill.

Orders of the Day — New Clause.—(AMENDMENT OF SCHEDULE 2 TO CONTRACTS OF EMPLOYMENT ACT 1963.)

In Schedule 2 to the Contracts of Employment Act 1963, after sub-paragraph (4) of paragraph 2 there shall be inserted the following sub-paragraphs:—
(4A) Where, in arriving at the said average hourly rate of remuneration, account has to be taken of remuneration payable for, or apportionable to, work done in hours other than normal working hours, and the amount of that remuneration was greater

than it would have been if the work had been done in normal working hours, account shall be taken of that remuneration as if—

(a) the work had been done in normal working hours, and
(b) the amount of that remuneration had been reduced accordingly.

(4B) For the purposes of the application of the last preceding sub-paragraph to a case falling within paragraph 1(2) of this Schedule, the last preceding sub-paragraph shall be construed as if, for the words 'had been done in normal working hours', in each place where those words occur, there were substituted the words 'had been done in normal working hours falling within the number of hours without overtime (as defined by paragraph 1 of this Schedule)'".—[Mr. Thornton.]

Brought up, and read the First time.

Mr. Thornton: I beg to move, That the Clause be read a Second time.
The changes provided by new Clause No. 2 were foreshadowed in Standing Committee and the main objective is to bring the calculation of a week's pay in the case of piece workers more closely into line with that for workers on straight time days. It excludes the element of overtime premium from the calculation of a week's pay for purposes of the Bill in cases of piece workers.
A week's pay as it is to be defined in the Bill will have two bases. The first will be the basis for computing the amount of redundancy payment relevant to recourse under paragraph 5 of Schedule 1 and the second will be the basis for deciding whether a particular week's pay was sufficiently reduced for that week to count as short time. The relevant paragraph is paragraph 2 of Schedule 2.
The effect of the Clause will be to exclude overtime premiums from earnings which are taken into account for both these purposes and also, by amending the Contracts of Employment Act, we shall be making the sum additional in respect of calculations of the guaranteed weekly minimum by notice under Schedule 2.

Mr. Ronald Bell: This is a splendidly complicated Clause, but, after spending the appropriate amount of time on it, I understand it—for the moment—and it seems to me to be admirable in conception and execution. We are grateful to the hon. Gentleman for dealing with this further defect in the original Bill and support the Clause.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

Orders of the Day — New Clause.—(RIGHT TO REDUNDANCY PAYMENT BY REASON OF LAY-OFF OR SHORT TIME.)

5
(1) An employee shall not be entitled to a redundancy payment by reason of being laid off or kept on short-time unless he gives notice in writing to his employer indicating (in whatsoever terms) his intention to claim a redundancy payment in respect of lay-off or short-time (in this section and in section (Supplementary provisions as to redundancy payments in respect of lay-off or short-time) of this Act referred to as a "notice of intention to claim") and, before the service of that notice, either—



(a) he has been laid off or kept on short-time for four or more consecutive weeks of which the last before the service of the notice ended on the date of service thereof or ended not more than four weeks before that date, or


10
(b) he has been laid off or kept on short-time for a series of six or more weeks (of which not more than three were consecutive) within a period of thirteen weeks, where the last week of the series before the service of the notice ended on the date of service thereof or ended not more than four weeks before that date.


15
(2) In this Part of this Act "the relevant date", in relation to a notice of intention to claim or a right to a redundancy payment in pursuance of such a notice,—



(a) in a case falling within paragraph (a) of the preceding subsection, means the date on which the last of the four or more consecutive weeks before the service of the notice came to an end, and


20
(b) in a case falling within paragraph (b) of that subsection, means the date on which the last of the series of six or more weeks before the service of the notice came to an end.



(3) Where an employee has given notice of intention to claim,—


25
(a) he shall not be entitled to a redundancy payment in pursuance of that notice unless he terminates his contract of employment by a week's notice which (whether given before or after or at the same time as the notice of intention to claim) is given before the end of the period allowed for the purposes of this paragraph (as specified in subsection (5) of section (Supplementary provisions as to redundancy payments in respect of lay-off or short-time) of this Act), and


30
(b) he shall not be entitled to a redundancy payment in pursuance of the notice of intention to claim if he is dismissed by his employer (but without prejudice to any right to a redundancy payment by reason of the dismissal):


35
Provided that, if the employee is required by his contract of employment to give more than a week's notice to terminate the contract, the reference in paragraph (a) of this subsection to a week's notice shall be construed as a reference to the minimum notice which he is so required to give.


40
(4) Subject to the next following subsection, an employee shall not be entitled to a redundancy payment in pursuance of a notice of intention to claim if, on the date of service of that notice, it was reasonably to be expected that the employee (if he continued to be employed by the same employer) would, not later than four weeks after that date, enter upon a period of employment of not less than thirteen weeks during which he would not be laid off or kept on short-time for any week.


45
(5) The last preceding subsection shall not apply unless, within seven days after the service of the notice of intention to claim, the employer gives to the employee notice in writing (in section (Supplementary provisions as to redundancy payments in respect of lay-off or short-time) of this Act referred to as a "counter-notice") that he will contest any liability to pay to him a redundancy payment in pursuance of the notice of intention to claim.—[Mr. Thornton.]

Brought up, and read the First time.

Mr. Thornton: I beg to move, That the Clause be read a Second time.

Mr. Speaker: I suggest that we discuss, at the same time, the two Amendments to new Clause No. 3, standing in the name of the hon. Member for Harrow, West (Mr. John Page), in line 7, at end insert

in the case of lay-off or eight or more consecutive weeks in the case of short-time, or partly the one and partly the other".
In line 12, after "weeks", insert
in the case of lay-off, or for a series of twelve or more weeks (of which not more than six were consecutive) within a period of twenty-six weeks in the case of short time, or of partly the one and partly the other".




the Government's new Clause No. 4.—"SUPPLEMENTARY PROVISIONS AS TO REDUNDANCY PAYMENTS IN RESPECT OF LAY-OFF OF SHORT TIME."


5
(1) If, in a case where an employee gives notice of intention to claim and the employer gives a counter-notice, the employee continues or has continued, during the next four weeks after the date of service of the notice of intention to claim, to be employed by the same employer, and he is or has been laid off or kept on short-time for each of those weeks, it shall be conclusively presumed that the condition specified in subsection (4) of section (Right to redundancy payment by reason of lay-off or short-time) of this Act was not fulfilled.


10
(2) For the purposes of subsection (1) of that section, and for the purposes of the preceding subsection, it is immaterial whether a series of weeks (whether it is four weeks, or four or more weeks, or six or more weeks) consists wholly of weeks for which the employee is laid off or wholly of weeks for which he is kept on short-time or partly of the one and partly of the other.


15
(3) For the purposes mentioned in the last preceding subsection, no account shall be taken of any week for which an employee is laid off or kept on short-time where the lay-off or short-time is wholly or mainly attributable to a strike or a lock-out, whether the strike or lock-out is in the trade or industry in which the employee is employed or not and whether it is in Great Britain or elsewhere.


20
(4) Where the employer gives a counter-notice within seven days after the service of a notice of intention to claim, and does not withdraw the counter-notice by a subsequent notice in writing, the employee shall not be entitled to a redundancy payment in pursuance of the notice of intention to claim except in accordance with a decision of a tribunal.


25
(5) The period allowed for the purposes of subsection (3) (a) of section (Right to redundancy payment by reason of lay-off or short-time) of this Act is as follows, that is to say,—



(a) if the employer does not give a counter-notice within seven days after the service of the notice of intention to claim, that period is three weeks after the end of those seven days;


30
(b) if the employer gives a counter-notice within those seven days, but withdraws it by a subsequent notice in writing, that period is three weeks after the service of the notice of withdrawal;


35
(c) if the employer gives a counter-notice within those seven days and does not so withdraw it, and a question as to the right of the employee to a redundancy payment in pursuance of the notice of intention to claim is referred to a tribunal, that period is three weeks after the tribunal has notified to the employee its decision on that reference.


40
(6) For the purposes of paragraph (c) of the last preceding subsection no account shall be taken of any appeal against the decision of the tribunal, or of any requirement to the tribunal to state a case for the opinion of the High Court or the Court of Session, or of any proceedings or decision in consequence of such an appeal or requirement.

and the proposed Amendment of the hon. Member for Harrow, West (Mr. John Page) to new Clause No. 4, to leave out lines 8 to 12.

Mr. John Page: On a point of Order, Mr. Speaker. Perhaps you could clear up the question whether we shall be able to vote on our Amendments to new Clauses Nos. 3 and 4.

Mr. Speaker: I was not proposing to allow a vote on them unless someone felt very strongly. I was proposing merely that they should be discussed with the two new Clauses.

Mr. Godber: Further to that point of order, Mr. Speaker. There are points here on which we feel strongly. Would you allow us to vote on at least one of the Amendments, for otherwise we should be compelled to vote against the Clause

with which in general we are in agreement?

Mr. Speaker: I will do that. However, I should be grateful if it were limited to the first Amendment, for the convenience of the House.

Mr. Thornton: The main purpose of the two new Clauses is to introduce various time limits into the process of establishing rights to redundancy payments arising from prolonged lay-off and short time. The need for provisions of this kind was generally accepted in Committee. The Clauses also introduce a few minor changes designed to improve the procedures contained in the existing Clauses 6 and 7.
I should make it clear that the Clauses would incorporate any change of substance in the basic provisions governing


rights following lay-off or short time. These remain unchanged. But rather than introduce a long series of detailed Amendments we thought on balance that it would be more convenient to embody this in new Clauses.
The first change is contained in new Clause No. 3(1). The effect is that if a claim for redundancy payment is to succeed the worker must serve notice on his employer of his intention to claim it and must serve that notice not later than four weeks after the end of the period of lay-off or short time which has continued for the length of time specified in the subsection. The object here is to limit the extent to which the worker can claim retrospectively. It may be that a worker could be kept on short time for as long as eight successive weeks and might decide to put up with the situation and not claim a redundancy payment. Normal working might then be resumed. Unless we insert a time limit such as this he would be able to continue in that employment for up to six months and then still make a valid claim in respect of the period of short time which had ended six months before, because the only time limit in the Bill as it stands is the six months' limit in Clause 21.
We accept that it would be clearly unsatisfactory for the employer if left at risk over such a long period and for compensation to be required for a situation which the worker had accepted at the time and which had long since disappeared. I suggest, therefore, that a limit of four weeks from when the employee has undergone the period of four to six weeks lay-off or short time would be a reasonable provision. It gives the worker a short period in which to consider his position but does not allow the situation to drag on for a long time.
The next change in substance is contained in new Clause No. 3(3) which needs to be read in conjunction with new Clause No. 4(5). These provisions relate to the situation where the worker has already served notice on his employer that he intends to claim a redundancy payment and where, although the employer does not contest liability, the case has gone to a tribunal which has awarded a payment.
The purpose of the provisions is to ensure that in this situation the worker

cannot continue in the employment for any period up to six months as laid down in Clause 21 and still have, as it were, a frozen right to redundancy payment of which he could avail himself at any time if he chose to walk out. I do not think the need for this is in dispute.
There is also a limit of this kind in the existing Clause 7(3,c), but that only covers the case where the claim has been referred to a tribunal. It was recognised in Committee that this was not wide enough and the provisions now proposed will fill the gap. The time limit in Clause 7(3,c) is in the form that the worker must not continue in that employment for more than four weeks after the day of the tribunal's award. We have changed this to a stipulation that he must give a week's notice of termination, or longer if his contract so requires, within three weeks of the date specified in the relevant paragraph of Clause 4(5).
The effect will be much the same as before but we are getting round the possible difficulty, which I think the hon. Member for Buckinghamshire, South (Mr. Ronald Bell) recognised, in which the worker could be under an obligation to give more than a week's notice, or even more than four weeks' notice.

7.30 p.m.

Sir Harmar Nicholls: Could not that be seven weeks; if it were three weeks and if the man was on a monthly contract?

Mr. Thornton: I am not sure of the point the hon. Gentleman is making.

Sir Harmar Nicholls: If the man were on a weekly employment basis, then a week's notice on top of the three weeks would bring it back to four weeks, which would seem to be the amount of time the hon. Gentleman has in mind. However, if the man were on a monthly contract it could be seven weeks—four weeks on top of the three—which could mean quite a gap.

Mr. Thornton: That is quite correct. The hon. Gentleman has summed the position up admirably.
The points I have made so far are the main changes which the new Clauses introduce. They are in line with what the Committee felt was required. There are two other minor points with which, in


the interests of brevity, I will not deal at the moment. I will merely repeat that, apart from the changes which I have mentioned, the new Clauses do not alter the main substance of the Bill on lay-off and short time.
Do I understand, Mr. Speaker, that it would be convenient for the House to discuss, at the same time, the consequential Amendments, Nos. 19, 20, 102 and 103?

Mr. Speaker: Certainly, if the House so pleases.

Mr. John Page: I am grateful to you for calling me so early in the discussion on these new Clauses, Mr. Speaker, because I wish to confine my remarks to the substance of the Amendments, which deal with the most controversial aspects of the new Clauses, which is the period of lay-off and short-time and combined periods of lay-off and short-time which would give an employee the right to redundancy payments.
As the Bill stands, in general terms an employee could claim if he was laid off or was on short time for four or more consecutive weeks. Where lay-off or short-time is not consecutive, he would have to be affected for six out of 13 weeks, of which not more than three weeks were consecutive.
In Committee we had a detailed and useful discussion about these periods of short-time and lay-off. My hon. Friends and I divided the Committee because we felt that the Government were not making sufficient distinction between lay-off and short-time. For "short time" I use the definition given by the Parliamentary Secretary—a week in which an employee earns less than half a week's wages.
My hon. Friends and I feel most strongly that a greater distinction should be made between lay-off and short-time. Our Amendments are designed to draw attention to the necessity for such a distinction. I do not quarrel with the way in which the Government propose to deal with lay-off and the Amendments would make no change in the period of lay-off. We are very unhappy indeed, however, about the period of short-time, which is indentical to the period of lay-off and also to the period of mixed short-time and lay-off.
If the Government's proposal for the period of lay off is right, then it seems to us that the period of short time and mixed short-time and lay-off—which I will call "mixed-time"—should be longer. It cannot be right for the periods of lay-off and the periods of short-time and mixed-time to be identical. The Parliamentary Secretary did not accept our view in Committee and said at one point:
… I am not prepared to admit that there is a very substantial difference, or any difference at all, between lay off and working two days a week. I emphasise that in practical terms it means a two-day week. Taking a wage of £15 a week—£3 a day—a man will have a weekly wage of only £6 for as long as eight weeks."—[OFFICIAL REPORT, Standing Committee D, 20th May, 1965 c. 273.]
The difference between the four-week and eight-week period is due to the fact that an employer is entitled to offer an employee a continuing period of a further four weeks of full-time employment, in which case the claim for redundancy would normally lapse.
Not only cannot we accept the view of the Parliamentary Secretary but we can prove statistically that his argument does not stand up. If we accept his definition of short-time—that the employee would be working for two days out of a five or five-and-a-half day week—he would receive his payment for that two days of the week. On top of that, after a waiting period of three days, he could claim one-sixth of the unemployment benefit per day for the other three or three-and-a-half days. This must put an employee on short-time in a significantly better position—probably amounting for a married man with, say, two children, to £4 or £5 a week—compared with the total income during a period of a man who is laid off. That is an important reason why there should be, from the employees point of view, a difference between lay-off and short-time.
The other aspects on which we propose longer periods of qualification before a redundancy payment can be claimed are clear, and examples can be given from a large number of industries and agricultural and service employments. The first likely reason for a period of four weeks' of short-time is the weather. My constituents in Harrow, West have extremely good judgment and they blame the present Government for many of the ills


which are brought down upon the heads of hard working and honest people. However, when they start blaming the Government for the weather I stick up for the Government and say that it is not their fault—which shows how fair minded and oecumenical we are.
It is not difficult to think of times, particularly in the building and construction industry, in agriculture and in horticulture, when the weather could mean short-time working for fairly long periods, without any fault whatever on the part of the employer. Many of us on this side have been told by our constituents how worried they are about this aspect. Frost and snow could, even in a fairly moderate winter, affect those industries very considerably. We think that four weeks consecutive short-time because of weather should not be considered extremely abnormal or unusual. I should have thought that in such a country as this we could expect those conditions once, say, in every three years.
The smaller employer, particularly in the building industry, might have to meet a substantial claim for redundancy payments after four weeks just at the very moment when the firm's finances were at their worst. The period in the Bill is not realistic and should be increased as suggested in our Amendments. In the manufacturing industries, in which the Parliamentary Secretary has had so much experience, there can be many reasons for short-time working for periods of at least four weeks, again through no fault whatever of the employer.
A sub-contractor might fail to provide supplies when they were expected by the main contractor. Manufacture of an article might have to be put off while potential retail and wholesale purchasers waited to see what a forthcoming Budget might contain—that often lowers demand between Christmas and April when, in any case, demand is often at its lowest. The effect of swingeing taxes in a new Budget, such as we have had this year, could gravely affect the purchase of certain manufactured articles. Upward alterations in hire-purchase down payments for some consumer durables could easily cut out a manufacturer's whole programme for a period, when it would be important to put the factory on short-time. In fact, one could easily imagine

workpeople pleading that short-time rather than that full-time should be worked by all employees so that some would not be made redundant because of lack of demand. A high Bank Rate could have a very considerable effect.
All these reasons must appeal to the Parliamentary Secretary, with his experience and knowledge of industry, especially in Lancashire. He must appreciate that four weeks is far too short a period to be accepted either in respect of short-time or of a mixture of short-time and lay-off. We have suggested that the lay-off period should be as it is in the Bill, but that we should increase from four consecutive weeks to eight the period of short-time and mixed-time working; and that where the short-time and mixed-time working is not consecutive the period should be increased to 12 or more weeks, of which not more than six are consecutive within a period of 26 weeks.
We very much hope that, even at this late stage, the Government will take notice of our feelings and in some way find it possible to meet what we believe to be sensible and realistic Amendments to a Clause which in many ways we find quite acceptable.

7.45 p.m.

Mr. Hale: Now we really know what Palmerston said in 1852. The hon. Member for Harrow, West (Mr. John Page) has put forward one of a series of Amendments all of which are intended or designed to reduce the rights of the worker, and all of which are intended or designed to reduce the alleged burden on employers. It is a strange attitude to a Bill of this kind. The hon. Member has certainly put the Victorian employer's point of view, which I do not find to exist in Oldham today. I do not come across it.
He refers to an anomaly which has existed throughout my life. I remember the days when a miner working at the coal face for three days a week at 10s. a shift, and having a wife and children, got something up to £2 10s. as unemployment pay, but if he was working four days a week he only got a couple of quid, and no unemployment pay.
There was a lot of suggestion in the pits at the time that the employers rather arranged these timings in what they thought to be the national interest—the "national interest" being this


curious thing called the Exchequer, which throughout my time I have been told has been empty, yet from which people always seem to be extracting paper money for many and varied purposes.
There is another anomaly to which I sought to call attention in a Bill which I presented to the House, which was received with enthusiasm, but for which time has not been found. It is the anomaly, quite relevant to this matter, of the restricted ambit of employment becoming recognised as, and held to be, a full working week. There are reactionary decisions on this point. Disabled and blind people have been told, "You have been working for so long at four days a week that we have come to the conclusion that this is the full ambit or this type of employment, and it will be restricted to that".
I have tried to put that position right, and it is astonishing that a Labour Government should not be able to find 10 minutes for this Measure. I should be out of order were I to say that tomorrow night we shall find many hours to consider other matters, but we should reconsider, whether we cannot find 10 minutes to put this anomaly right. I have had, and I say this quite seriously, sympathetic and helpful observations and views, and a good deal of assistance from hon. Gentlemen opposite, who have not objected to any of my proposals.
Nevertheless, I rejoice that I can assist the Government on their difficult way, and I put my massive sholders to the wheel on their behalf. I applaud the attitude of my hon. Friend the Parliamentary Secretary in this matter. He must stand firm. It is vitally important that he should stand firm on this provision, because it is vital, while the Amendment is destructive of the purpose of the Bill.
The figures given by my hon. Friend the Parliamentary Secretary in Committee were fair figures. There may be terribly hard cases, but what does the hon. Member for Harrow, West suggest? He says "We want our freedom. Tory Freedom Works—for the employer. If someone mucks up a contract which delays delivery of materials, the worker must be laid off. He has to bear the blame and his wife and kids must suffer as a consequence of someone else's delay. If Bank Rate goes up the worker is to be laid off."

The worker is to be laid off for almost any emergency under the sun.
The hon. Member was wrong in suggesting that we were not even blamed for the weather. I can remember that the Tories moved a motion of Censure on us because of difficulties caused when snow was on the ground. This is a regrettably Victorian attitude taken by hon. Members opposite. I do not think that they sincerely believe it, but they go through the motions of being a successful Opposition and try to show that they sustain an interest in industrial problems, even though the Leader of the Opposition does not know much about them.
The problem of short-time working is very serious. It just is not true that a worker who has been employed by a firm for many years and has the prospect of receiving substantial compensation would walk out and leave his work every time it rained. Throughout my time the building workers' union has been complaining about employers who say to men, "It is too cold to have you on; we shan't get work out of you", or, "It is too wet", or, "We cannot deliver materials". This has been working gravely to the detriment of some workers. It is time that employers were brought up to date in providing employment for their men. If they do so, they will have the confidence of the British workman, who is the most decent workman on earth and is not likely to cash in on this proposal in the way suggested by the hon. Member.

Mr. Ray Mawby: I did not intend speaking on this matter, but as my name is attached to the Amendments I take up the points made by the hon. Member for Oldham, West (Mr. Hale). I think that he was having a little fun at our expense. If so, I have no complaint to make, but he rather suggested that when we put down these Amendments we were exhibiting a Victorian attitude and taking from workers one of the rights they ought to have. Nothing could be further from the truth.
If the hon. Member listened to my hon. Friend the Member for Harrow, West (Mr. John Page), he would have realised that there are many occasions on which an employer is forced to lay off his men or to ask them to work short time through circumstances over which


he has no control. The hon. Member talked about keeping a man off work because of rain. If he could tell me of ways in which bricks could be laid when there is heavy frost I should be interested. At present, there seems no alternative to saying, "Do not mix any more cement, because it will be no good".

Mr. Thornton: Would not the hon. Member agree that in the case indicated, of a construction industry, it is lay-off which is the problem, not short-time?

Mr. Mawby: The hon. Gentleman may be right about that. The important thing is that there are many reasons one can think of for an employer having to take certain actions in circumstances which are not within his control. My hon. Friend mentioned some, such as a change in Bank Rate or as a result of Government action. When one thinks of the cancellation of the TSR2 one realises that there are things which happen over which the employer has no control. I hope that every employer would take all possible steps to make certain either that he was able to give continuous employment to all his employees or, being fair-minded, that he would say, "I am sorry, redundancy is occurring. I shall give you the longest notice possible".
These Amendments are not concerned with protecting the employer but with protecting the fund from which redundancy payments are made. We should keep a proper balance. If money is to be used from the fund and paid to people who are by no means redundant but because of particular circumstances are laid off or working short-time, others will not be helped. We should try to strike a period which is fair both to the employee and to the central fund. If the fund is to be depleted by these cases, obviously the money cannot be used for other cases.
Our main consideration should be that payments should be made to those who suffer or are likely to suffer hardship as a result of genuine redundancy. In those cases they ought to be paid in full for the hardship they suffer and for all the things they have to do to obtain other employment including, perhaps, moving from home. That must be done, but we must keep in mind that if we dissipate

the fund on people who are working short-time there will not be money available to deal with desperate cases. The hon. Member for Oldham, West has been accusing us of motives which we do not have.

Mr. Hale: What I specifically said—and I should be happy if the hon. Member can refute it because I like an atmosphere of good will—was that on reading through the Amendments put forward by the Opposition I found that they would all seek to reduce the rights of the worker. They all seem to cost him something and to be designed to protect the fund or the employer. Is that true or is it not?

Mr. Mawby: I cannot speak on behalf of my hon. and right hon. Friends, but the Amendments to which I have added my name are required to make certain that the balance is maintained at a proper level so that the employee who suffers genuine hardship shall receive full benefit, and the fund will not be dissipated by payments to those who suffer no hardship but who, in the course of some temporary change in circumstances, are working short-time and therefore require no payments.

Mr. Ness Edwards: When my hon. Friend the Parliamentary Secretary replies, I hope that he will deal with one or two points of explanation. By new Clause 1 we give protection to the employers. In this new Clause 3 we are giving extended protection to the employers against the workers. I should like to know what "short-time working" means. Short-time working can become the normal working week, and it can occur quickly by a change of contract.
I should also like to know what being laid-off means. Does it include a lockout? The position is quite clear in a strike, but there is no indication of what the rights of the worker may be in a lockout. Will my hon. Friend say something about the important point of whether a lockout can deprive a worker of rights to redundancy payment or if it is to be treated as if he were laid-off? I hope my hon. Friend will deal with the distinction between these situations.

8.0 p.m.

Mr. Godber: I understand that the new Clauses take the place of the old Clauses 6 and 7. We understand the new


drafting. We accept this. We think that this is a useful development and yet one further indication of what we have already said, which I will not keep repeating, about the need for greater clarification in drafting.
Coming on to the Amendment to the Clause, I want to say one word to the hon. Member for Oldham, West (Mr. Hale). It is unfortunate that we did not have the benefit of the hon. Gentleman's advice in Committee. We should have been very happy if we had had it.

Mr. Hale: There were a number of reasons for that. Perhaps I may mention that one reason was that I was not a member of the Committee.

Mr. Godber: That was the point I was seeking to make. The hon. Gentleman has clarified it for me, and I am grateful to him for doing so. We did not have the hon. Gentleman's advice. Had we had it, the hon. Gentleman might have realised a little more the attitude of my right hon. and hon. Friends to the whole purpose of the Bill. This is a Bill which we have supported and which we believe to be right. It is a Bill which imposes additional burdens on employers which are generally accepted. They are accepted in a good spirit by employers throughout the country. The Bill will be very helpful to industry and to relations in industry.
These additional burdens having been accepted, it is natural that in considering a Bill of this nature we must consider how certain aspects of it will operate in certain cases. The hon. Gentleman has said that certain of the Amendments we have tabled would operate against the workers. It is the function of an Opposition, looking at a Bill of this kind, to see that proper provision is made so that there will not be abuse of funds which are provided in this way. Much of this money will not be provided by the individual employer himself, but through the funding system by employers generally all over the country. I do not think that the hon. Gentleman or anybody else would wish to see the funds improperly used.
We have felt all along that there was a distinction between lay-off and short-time. We have taken the view that certain industries—we have had this forcibly

brought to our attention by various industries—have special problems outside their control. We debated this in Committee. I do not propose to go over those debates again. We highlighted the problems of the building industry in regard to short-time. We have also received very strong representations from the furniture trade, representatives of which went to the Ministry to point out some of its seasonal difficulties.
One point which genuinely worries some employers in the furniture industry is that a man who has been on short-time for slightly more than the period provided in the Bill might take his redundancy pay and then not go back to the same employer, which is what happens at present, but will go to another employer. Having taken his redundancy payment, he will probably not feel that he can very well return to his old employer. There is a feeling that this may disturb relations between employers and workers, who have over the years accepted the difficulties which arise in this industry in regard to short-time working.
There is another point which I think the hon. Member for Oldham, West, will appreciate if I put it to him in this way. Take the case of a man who has, by reason of employment with one firm, built up a very considerable sum which he will be entitled to receive on redundancy. If he goes on short-time now and takes this redundancy payment at this stage, even though he will be on short-time for only the number of weeks provided by the Bill, when he returns to work he will have exhausted his right to the redundancy payment and must start all over again from scratch.
The general purpose of the redundancy payment is to help a man who finishes work with one employer and spends some time looking for work elsewhere. If a man exhausts his right to redundancy payment, it takes him two years before he begins to build up his right again. This problem must be faced in regard to a man who has taken redundancy payment at this stage and returns to employment again, because he will not be entitled to receive redundancy payment again for some time if he does become fully redundant, as opposed to being merely on short-time. I make


this point merely in passing, but it is a point to be borne in mind.

Mr. Hale: It seems to be similar to the golden handshake.

Mr. Godber: I do not think that that arises in relation to short-time. This is the equivalent of the golden handshake in industry. This is the purpose of the Bill. Generally speaking, this is why we support it. We do not feel that the Government have paid sufficient attention to our argument in regard to short-time. We believe that it should have been eight weeks in the case of short-time and four weeks in the case of lay-off. We argued this at length in Committee. I do not propose to take up the time of the House any longer now. We believe that this is an important issue which affects certain industries and which could have a harmful effect on relations within those industries.
For these reasons, we shall have to press this Amendment at the appropriate moment.

Mr. Thornton: In reply to my right hon. Friend the Member for Caerphilly (Mr. Ness Edwards), a worker cannot accumulate a right to payment by being locked out. The Bill neutralises industrial disputes, both strikes and lockouts. The new Clauses do not in any way diminish the rights to redundancy payments.

Mr. Ness Edwards: My hon. Friend cannot dismiss my point in that way. During the currency of a strike, a worker's right is diminished. A strike is something for which the worker is responsible. If he is locked out, it is the employer who is responsible and the worker wants a protection against the employer. The employer is given a protection against the worker when the worker strikes. That protection is not given to the worker when he is locked out.

Mr. Thornton: As fairly as possible we attempt to neutralise the incidence of both strikes and lockouts in the Bill. I assure my right hon. Friend that the new Clauses do not effect any diminution in the right to redundancy pay in respect of short-time and lay-off. They merely place a reasonable limit on the time in which the employee lodges his claim or gives notice of his claim after he has qualified for that claim.
The hon. Member for Totnes (Mr. Mawby) introduced a new argument. It is the first time I have heard from the other side a justification for extending short-time, namely, that it would save the Redundancy Fund. I am not impressed by this new argument.
I must draw the attention of the House to what is involved in short-time. The provision is that for a worker to be on short-time he must be in receipt of less than half a normal week's wage. The House must recognise that the general pattern of employment in this country is a five-day or a five-shift week. So this provision means two shifts a week. All the experience of my Department is that it rarely happens for a firm to go on to a two-day week. Short-time is usually worked as a three-day or a four-day week, or a three-shift or a four-shift week. When production requirements fall to that level, the situation is usually met by a week of closing down the plant and then a week of employment.
Both in Committee and again this evening we have been accused of producing a very complicated Bill. It is complicated because it deals with a complicated problem. But to introduce these formulae would add remarkably to the complications—eight consecutive weeks of short-time, four consecutive weeks of lay-off, a combination of the two, 12 weeks in 26 of either short-time or lay-off or a mixture of the two.
I am not sure whether the hon. Member for Harrow, West (Mr. John Page) has tried to work this out and to find all the combinations which an employee would have to fit to satisfy those requirements, but I spent an hour at it and gave up because it was so complicated. The formula would be so complicated that it would be very difficult for a worker to unravel whether he had qualified.
Much has been made of the fact that the Bill has a limit of four weeks for short-time and lay-off, but if the employer contests the worker's claim of four weeks short-time or lay-off, he can appeal to the tribunal and if the tribunal is satisfied that there are reasonable prospects within a further four weeks of the worker having employment which is not short-time, then the tribunal will uphold the employer's view.
Let us remember that short-time will mean less than three shifts a week, so that the employee is working less than three out of five. Under the Amendment, a worker could be on short-time if he were doing two shifts or two days a week for eight weeks, plus a further four weeks, making 12 weeks in all, when for the whole of that period he would not have half a week's wage in any of the 12 consecutive weeks. That would be going too far.
These are matters of judgment, but I am satisfied that what we propose—four weeks for short-time and four for lay-off, six in 13—is a reasonable proposition which is fair to the employer and reasonably fair to the worker. I can assure my hon. Friend the Member for Oldham, West (Mr. Hale) that we shall stand fast on this matter.

Sir Harmar Nicholls: Perhaps I ought to know, but does the Bill lay down that short-time is less than half a week?

Mr. Thornton: Yes.

Mr. Emlyn Hooson: I did not have the advantage of being a member of the Standing Committee, but I have listened to the debate today with a great deal of interest. I was glad to hear the Parliamentary Secretary sticking to his new Clause and not accepting the Amendment. If we are to have a good Redundancy Payments Bill, it must be as progressive and as generous as possible, to create the right atmosphere in British industry.
I was not impressed by the speech of the hon. Member for Totnes (Mr. Mawby), who has great experience in these matters but who did not put forward any kind of convincing case, for saying that if the Amendment were not accepted there would be, as it were, a great run on the Redundancy Fund. Experience of British industry is such—and this experience must be available to the Ministry—that the difference between the Clause as drafted and as amended can fairly well be guaged. I understand that short-time working is defined in the Bill as less than half the weekly wage.

Mr. Thornton: It is less than half the normal weekly earnings.

Mr. Hooson: I am most grateful for that information. I understood that that was so. The Government are taking absolutely the right course. They are providing a fairly simple formula, which they must have calculated on the experience available to the Ministry as being practical, and no arguments have been advanced by the Opposition to support the Amendment. I shall certainly advise my hon. Friends to support the Government on this occasion.

8.15 p.m.

Mr. Edwin Wainwright: I was not quite clear about my hon. Friend's answer to my right hon. Friend the Member for Caerphilly (Mr. Ness Edwards). There are bad as well as good employers. An employer may suddenly and without consultation with the trade unions change the conditions of employment. Because there have been no negotiations, the employees may decide to refuse to accept the conditions and the men may then be locked out. Will there be any safeguard so that such an employer is not allowed to use that kind of threat so that the men concerned, afraid of not being able to claim redundancy payment, will accept those conditions which the employer has imposed?

Mr. Kenneth Lewis: Has not the hon. Gentleman heard of the Contracts of Employment Act which was passed by the previous Government?

Mr. Wainwright: Of course I have. The hon. Gentleman has not had as much experience of this sort of thing in industry as I have. Employers can often quickly get round legislation. I want to make certain that my hon. Friend will take account of the point of view of my right hon. Friend the Member for Caerphilly and will see that the Bill safeguards the employee against the bad employer.

Question put and agreed to.

Clause read a Second time.

Amendment proposed to the proposed Clause: In line 7, at end insert:
in the case of lay-off or eight or more consecutive weeks in the case of short-time, or of partly the one and partly the other".—[Mr. John Page.]

Question put, That those words be there inserted in the proposed Clause:—

The House divided: Ayes 111, Noes 147.

Division No. 259.]
AYES
[8.17 p.m.


Astor, John
Goodhew, Victor
Murton, Oscar


Baker, W. H. K.
Gower, Raymond
Nicholls, Sir Harmar


Barlow, Sir John
Grieve, Percy
Nicholson, Sir Godfrey


Bell, Ronald
Griffiths, Peter (Smethwick)
Osborn, John (Hallam)


Bennett, Dr. Reginald (Gos. &amp; Fhm)
Gurden, Harold
Page, John (Harrow, W.)


Berry, Hn. Anthony
Hall-Davis, A. G. F.
Page, R. Graham (Crosby)


Birch, Rt. Hn. Nigel
Harris, Frederic (Croydon, N. W.)
Pearson, Sir Frank (Clitheroe)


Bossom, Hn. Clive
Harris, Reader (Heston)
Peel, John


Box, Donald
Harvie Anderson, Miss
Percival, Ian


Boyd-Carpenter, Rt. Hn. J.
Hawkins, Paul
Pitt, Dame Edith


Brinton, Sir Tatton
Hay, John
Pounder, Rafton


Bromley-Davenport, Lt.-Col. Sir Walter
Heald, Rt. Hn. Sir Lionel
Pym, Francis


Brooke, Rt. Hn. Henry
Hendry, Forbes
Quennell, Miss J. M.


Brown, Sir Edward (Bath)
Hogg, Rt. Hn. Quintin
Redmayne, Rt. Hn. Sir Martin


Buchanan-Smith, Alick
Hornsby-Smith, Rt. Hn. Dame P.
Renton, Rt. Hn. Sir David


Buck, Antony
Howe, Geoffrey (Bebington)
Royle, Anthony


Bullus, Sir Eric
Hunt, John (Bromley)
Scott-Hopkins, James


Burden, F. A.
Iremonger, T. L.
Sinclair, Sir George


Cary, Sir Robert
Jennings, J. C.
Smith, Dudley (Br'ntf'd &amp; Chiswick)


Cooke, Robert
Johnson Smith, G. (East Grinstead)
Stainton, Keith


Costain, A. P.
Kerby, Capt. Henry
Studholme, Sir Henry


Craddock, Sir Beresford (Spelthorne)
Kilfedder, James A.
Talbot, John E.


Crawley, Aldan
Kirk, Peter
Taylor, Sir Charles (Eastbourne)


Crosthwaite-Eyre, Col. Sir Oliver
Lagden, Godfrey
Taylor, Edward M. (G'gow, Cathcart)


Crowder, F. P.
Legge-Bourke, Sir Harry
Taylor, Frank (Moss Side)


Curran, Charles
Lewis, Kenneth (Rutland)
Teeling, Sir William


Dalkeith, Earl of
Litchfield, Capt. John
Turton, Rt. Hn. R. H.


Davies, Dr. Wyndham (Perry Barr)
McAdden, Sir Stephen
Vaughan-Morgan, Rt. Hn. Sir John


Deedes, Rt. Hn. W. F.
MacArthur, Ian
Whitelaw, William


Digby, Simon Wingfield
McMaster, Stanley
Wills, Sir Gerald (Bridgwater)


Elliot, Capt. Walter (Carshalton)
Marten, Neil
Wilson, Geoffrey (Truro)


Errington, Sir Eric
Maude, Angus
Wise, A. R.


Eyre, Reginald
Mawby, Ray
Wolrige-Gordon, Patrick


Fletcher-Cooke, Charles (Darwen)
Maxwell-Hyslop, R. J.
Woodhouse, Hn. Christopher


Gammans, Lady
Maydon, Lt.-Cmdr. S. L. C.
Wylie, N. R.


Gilmour, Sir John (East Fife)
Mills, Peter (Torrington)



Glyn, Sir Richard
Mott-Radclyffe, Sir Charles
TELLERS FOR THE AYES:


Godber, Rt. Hn. J. B.
Munro-Lucas-Tooth, Sir Hugh
Mr. R. W. Elliott and




Mr. Jasper More.




NOES


Abse, Leo
Fernyhough, E.
Jones, Dan (Burnley)


Allen, Scholefield (Crewe)
Fitch, Alan (Wigan)
Jones, J. Idwal (Wrexham)


Bagier, Gordon A. T.
Fletcher, Ted (Darlington)
Jones, T. W. (Merioneth)


Barnett, Joel
Fletcher, Raymond (Ilkeston)
Kelley, Richard


Beaney, Alan
Foot, Sir Dingle (Ipswich)
Lawson, George


Bennett, J. (Glasgow, Bridgeton)
Ford, Ben
Leadbitter, Ted


Binns, John
Galpern, Sir Myer
Lewis, Arthur (West Ham, N.)


Blackburn, F.
Garrow, A.
Lewis, Ron (Carlisle)


Blenkinsop, Arthur
Ginsburg, David
Loughlin, Charles


Boardman, H.
Greenwood, Rt. Hn. Anthony
Lubbock, Eric


Bottomley, Rt. Hn. Arthur
Gregory, Arnold
McBride, Neil


Bowen, Roderic (Cardigan)
Grey, Charles
McGuire, Michael


Boyden, James
Griffiths, Rt. Hn. James (Llanelly)
Mclnnes, James


Bray, Dr. Jeremy
Grimond, Rt. Hn. J.
McKay, Mrs. Margaret


Broughton, Dr. A. D. D.
Hale, Leslie
Mackenzie, Alasdair (Ross &amp; Crom'ty)


Brown, Hugh D. (Glasgow, Provan)
Hamilton, James (Bothwell)
Mackenzie, Gregor (Rutherglen)


Buchan, Norman (Renfrewshire, W.)
Hamilton, William (West Fife)
Mackie, John (Enfield, E.)


Carmichael, Neil
Hannan, William
McLeavy, Frank


Carter-Jones, Lewis
Harper, Joseph
Mahon, Peter (Preston, S.)


Chapman, Donald
Harrison, Walter (Wakefield)
Mahon, Simon (Bootle)


Coleman, Donald
Hart, Mrs. Judith
Manuel, Archie


Craddock, George (Bradford, S.)
Heffer, Eric S.
Mapp, Charles


Crawshaw, Richard
Herbison, Rt. Hn. Margaret
Mendelson, J. J.


Cullen, Mrs. Alice
Hooson, H. E.
Millan, Bruce


Dalyell, Tam
Howarth, Robert L. (Bolton, E.)
Milne, Edward (Blyth)


Davies, G. Elfed (Rhondda, E.)
Howell, Denis (Small Heath)
Monslow, Walter


Davies, S. O. (Merthyr)
Howie, W.
Morris, Charles (Openshaw)


de Freitas, Sir Geoffrey
Hughes, Emrys (S. Ayrshire)
Oakes, Gordon


Dempsey, James
Hughes, Hector (Aberdeen, N.)
Ogden, Eric


Doig, Peter
Hunter, Adam (Dunfermline)
Orme, Stanley


Duffy, Dr. A. E. P.
Hunter, A. E. (Feltham)
Oswald, Thomas


Dunnett, Jack
Irving, Sydney (Dartford)
Owen, Will


Edwards, Rt. Hn. Ness (Caerphilly)
Jackson, Colin
Parker, John


Ensor, David
Jeger, George (Goole)
Pearson, Arthur (Pontypridd)


Evans, Ioan (Birmingham, Yardley)
Johnston, Russell (Inverness)
Peart, Rt. Hn. Fred




Pentland, Norman
Slater, Joseph (Sedgefield)
Walden, Brian (All Saints)


Probert, Arthur
Small, William
Walker, Harold (Doncaster)


Pursey, Cmdr. Harry
Snow, Julian
Wallace, George


Randall, Harry
Steel, David (Roxburgh)
Whitlock, William


Reynolds, G. W.
Steele, Thomas (Dunbartonshire, W.)
Wigg, Rt. Hn. George


Rhodes, Geoffrey
Stones, William
Williams, Alan (Swansea, W.)


Robertson, John (Paisley)
Stross, Sir Barnett (Stoke-on-Trent, C.)
Williams, Clifford (Abertillery)


Rose, Paul B.
Swingler, Stephen
Willis, George (Edinburgh, E.)


Ross, Rt. Hn. William
Taylor, Bernard (Mansfield)
Winterbottom, R. E.


Rowland, Christopher
Thomas, George (Cardiff, W.)
Woodburn, Rt. Hn. A.


Sheldon, Robert
Thomas, Iorwerth (Rhondda, W.)
Woof, Robert


Short, Rt. Hn. E. (N'c'tle-on-Tyne, C.)
Thornton, Ernest
Yates, Victor (Ladywood)


Short, Mrs. Renée (W'hampton, N. E.)
Tuck, Raphael



Silkin, John (Deptford)
Varley, Eric G.
TELLERS FOR THE NOES:


Silverman, Julius (Aston)
Wainwright, Edwin
Mrs. Harriet Slater and




Mr. Brian O'Malley.

Clause added to the Bill.

Orders of the Day — New Clause.—(SUPPLEMENTARY PROVISIONS AS TO REDUNDANCY PAYMENTS IN RESPECT OF LAY-OFF OR SHORT-TIME.)

(1) If, in a case where an employee gives notice of intention to claim, and the employer gives a counter-notice, the employee continues or has continued, during the next four weeks after the date of service of the notice of intention to claim, to be employed by the same employer, and he is or has been laid off or kept on short-time for each of those weeks, it shall be conclusively presumed that the condition specified in subsection (4) of section (Right to redundancy payment by reason of lay-off or short-time) of this Act was not fulfilled.

(2) For the purposes of subsection (1) of that section, and for the purposes of the preceding subsection, it is immaterial whether a series of weeks (whether it is four weeks, or four or more weeks, or six or more weeks) consists wholly of weeks for which the employee is laid off or wholly of weeks for which he is kept on short-time or partly of the one and partly of the other.

(3) For the purposes mentioned in the last preceding subsection, no account shall be taken of any week for which an employee is laid off or kept on short-time where the lay-off or short-time is wholly or mainly attributable to a strike or a lock-out, whether the strike or lock-out is in the trade or industry in which the employee is employed or not and whether it is in Great Britain or elsewhere.

(4) Where the employer gives a counter-notice within seven days after the service of a notice of intention to claim, and does not withdraw the counter-notice by a subsequent notice in writing, the employee shall not be entitled to a redundancy payment in pursuance of the notice of intention to claim except in accordance with a decision of a tribunal.

(5) The period allowed for the purposes of subsection (3) (a) of section (Right to redundancy payment by reason of lay-off or short-time) of this Act is as follows, that is to say,—

(a) if the employer does not give a counter-notice within seven days after the service of the notice of intention to claim, that period is three weeks after the end of those seven days;
(b) if the employer gives a counter-notice within those seven days, but withdraws it by

a subsequent notice in writing, that period is three weeks after the service of the notice of withdrawal;
(c) if the employer gives a counter-notice within those seven days and does not so withdraw it, and a question as to the right of the employee to a redundancy payment in pursuance of the notice of intention to claim is referred to a tribunal, that period is three weeks after the tribunal has notified to the employee its decision on that reference.

(6) For the purposes of paragraph (c) of the last preceding subsection no account shall be taken of any appeal against the decision of the tribunal, or of any requirement to the tribunal to state a case for the opinion of the High Court or the Court of Session, or of any proceedings or decision in consequence of such an appeal or requirement.—[Mr. Thornton.]

Brought up, and read the First and Second time, and added to the Bill.

Orders of the Day — New Clause.—(EMPLOYMENT WHOLLY OR PARTLY ABROAD.)

(1) An employee shall not be entitled to a redundancy payment if on the relevant date he is outside Great Britain, unless under his contract of employment he ordinarily worked in Great Britain.

(2) An employee who under his contract of employment ordinarily works outside Great Britain shall not be entitled to a redundancy payment unless on the relevant date he is in Great Britain in acordance with instructions given to him by his employer.

(3) Subject to the following provisions of this section, in computing, in relation to an employee, the period specified in section 8(1) of this Act, or the period specified in paragraph 1 of Schedule 1 to this Act, a week of employment shall not count if—

(a) the employee was employed outside Great Britain during the whole or part of that week, and
(b) no employer's contribution in respect of him was paid in respect of the corresponding contribution week,

unless an employer's contribution in respect of him was payable (though not in fact paid) in respect of the corresponding contribution week.

(4) For the purposes of the application of the last preceding subsection to a week of employment where the corresponding contribution week began before 5th July 1948, an


employer's contribution shall be treated as payable as mentioned in that subsection if such a contribution would have been so payable if the statutory provisions relating to national insurance which were in force on 5th July 1948 had been in force in that contribution week.

(5) Where by virtue of subsection (3) of this section a week of employment does not count in computing such a period as is mentioned in that subsection, the continuity of that period shall not be broken by reason only that that week of employment does not count in computing that period.

(6) Any question arising under this section whether an employer's contribution was paid, or was or would have been payable, as mentioned in subsection (3) or subsection (4) of this section, shall be determined by the Minister of Pensions and National Insurance; and the provisions of the National Insurance Act 1946 and any regulations made thereunder as to the determination of questions which under that Act or any such regulations that Minister is empowered to determine (including any such provisions as to the reference of questions for decision, or appeals, to the High Court or the Court of Session) shall apply to the determination of any question by that Minister under this section.

(7) The provisions of this section shall have effect subject to section 20 of his Act in cases to which that section applies.

(8) In this section "employer's contribution" has the same meaning as in the National Insurance Act 1946, "week of employment" means a week ending with Saturday, and "corresponding contribution week", in relation to a week of employment, means a contribution week (within the meaning of the National Insurance Act 1946) of which so much as falls within the period beginning with midnight between Sunday and Monday and ending with Saturday also falls within that week of employment.—[Mr. Thornton.]

Brought up, and read the First time.

Mr. Thornton: I beg to move, That the Clause be read a Second time.
It might be for the convenience of the House, Mr. Deputy-Speaker, if we took with this new Clause Amendments Nos. 15 and 45. They are both consequential on the new Clause.

Mr. Deputy-Speaker (Sir Samuel Storey): If the House so pleases.

Mr. Thornton: We had a very long debate in Committee on this complicated problem of service overseas, and the right hon. Member for Grantham (Mr. Godber) and his colleagues opposite suggested that we should consider linking it with the insurance principle. We have accepted that principle in the main in the new Clause. Payments in the case of service overseas will be related to years for which Class 1

National Insurance contributions were paid or ought to have been paid, in effect, these provisions will mean, generally, that only the first year of service overseas will count, but non-reckonable years of service overseas will not break continuity. But we insist that employees who normally work overseas must return to this country at the request of the employer to terminate the contract. A person who normally works in the United Kingdom can have his contract terminated anywhere and still be eligible for the payment.

8.30 p.m.

Mr. Ronald Bell: We are grateful to the hon. Gentleman for moving the new Clause which, as he will recognise, satisfies very largely the points which we made in Committee when, not in any unduly critical spirit, we pointed to the difficulties of the scheme which was in the Bill as it originally appeared. It seemed to us that a system which was based upon insurable weeks, as they are defined in the National Insurance legislation, would have many advantages. It would, almost automatically, solve some of the most difficult problems which the original system faced, and we are glad that after consideration the Government have come to the same conclusion and have embodied it in the new Clause, which is an undoubted improvement to the Bill.
I must not move outside the confines of the new Clause but a thought that goes through our minds is how much better the country would be governed if on so many matters the Government would take their views from the Opposition and carry them into effect in the way that the Parliamentary Secretary has so wisely and skilfully done in his new Clause, which I therefore commend to my hon. Friends.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

Orders of the Day — New Clause.—(MODIFICATION OF RIGHT TO REDUNDANCY PAYMENT WHERE PREVIOUS REDUNDANCY PAYMENT HAS BEEN PAID.)

(1) The provisions of this section shall have effect where—

(a) a redundancy payment is paid to an employee, whether in respect of dismissal or in respect of lay-off or short-time;


(b) the contract of employment under which he was employed (in this section referred to as "the previous contract") is renewed, whether by the same or another employer, or he is re-engaged under a new contract of employment, whether by the same or another employer; and
(c) the circumstances of the renewal or re-engagement are such that, in determining for the purposes of section 1(1) of, or Schedule 1 to, this Act whether at any subsequent time he has been continuously employed for the requisite period, or for what period he has been continuously employed, the continuity of his period of employment would, apart from this section, be treated as not having been broken by the termination of the previous contract and the renewal or re-engagement.

(2) Where the conditions mentioned in the preceding subsection are fulfilled, then in determining, for the purposes of section 1(1) of, or Schedule 1 to, this Act, whether at any subsequent time he has been continuously employed for the requisite period, or for what period he has been continuously employed, the continuity of the period of employment shall be treated as having been broken at the date which was the relevant date in relation to the redundancy payment mentioned in paragraph (a) of the preceding subsection, and accordingly no account shall be taken of any time before that date.

(3) For the purposes of this section a redundancy payment shall be treated as having been paid if—

(a) the whole of the payment has been paid to the employee by the employer, or, in a case where a tribunal has determined that the employer is liable to pay part (but not the whole) of the redundancy payment, that part of the redundancy payment has been paid in full to the employee by the employer, or
(b) the Minister has paid a sum to the employee in respect of the redundancy payment under section 29 of this Act.—[Mr. Thornton.]

Brought up, and read the First time.

Mr. Thornton: I beg to move, That the Clause be read a Second time.
I think that it would be for the convenience of the House to take with the new Clause the related Amendments, Nos. 23, 88, 104 and 110.
The effect of the new Clause can be described very simply. It will ensure that, once a person has been paid a redundancy payment, he goes back to square one for the purposes of building up his rights. I hope hon. Members will agree that it is clearly fair and reasonable. It has always been the Government's intention, and I think the only point that needs explanation is why such a provision is necessary at all.
The related Amendments to Clause 8 and Schedules 1 and 7 are purely technical, consequential changes.

Mr. Godber: We are grateful to the Parliamentary Secretary for his explanation of the Clause. It seems straightforward and it clarifies a position which was obscure. It appears to be the right way in which to do it. I agree with him entirely that this was always the intention, but it is now clarified and it is important that it should be. It was one of the points I was seeking to make in response to the hon. Member for Oldham, West (Mr. Hale), and I am sorry that he is no longer present.
Once a person has received a redundancy payment and goes back to square one, he is less protected for the next year or two, and therefore one does not want to facilitate a man getting the payment too easily if he is not in need of it. It is a valuable safeguard for him if he comes up against difficulties in future. It is right that he should understand exactly where he is placed, and the Clause makes it easier for everyone to understand it, not only clarifying the position but tidying it up. It is exactly as it should be. I therefore welcome the new Clause.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

Orders of the Day — New Clause.—(ISLE OF MAN.)

(1) If an Act of Tynwald is passed for purposes similar to the purposes of this Act, the Minister may, with the consent of the Treasury, make reciprocal arrangements with the appropriate Isle of Man authority for co-ordinating the provisions of this Act with the corresponding provisions of the Act of Tynwald so as to secure that they operate, to such extent as may be provided by the arrangements, as a single system.

(2) For the purposes of giving effect to any such arrangements, the Minister shall have power, in conjunction with the appropriate Isle of Man authority, to make any necessary financial adjustments between the Redundancy Fund and any fund established under the Act of Tynwald.

(3) The Minister may make regulations for giving effect in Great Britain to any such arrangements, and any such regulations may provide that this Act shall have effect in relation to persons affected by the arrangements subject to such modifications and adaptations as may be specified in the regulations, including provision—

(a) for securing that acts, omissions and events having any effect for the purposes of


the Act of Tyndwall shall have a corresponding effect for the purposes of this Act (but not so as to confer a right to double payment in respect of the same act, omission or event); and
(b) for determining, in cases where rights accrue both under this Act and under the Act of Tynwald, which of those rights shall be available to the person concerned.

(4) In this section "the appropriate Isle of Man authority" means such authority as may be specified in that behalf in an Act of Tynwald.—[Mr. Thornton.]

Brought up, and read the First time.

Mr. Thornton: I beg to move, That the Clause be read a Second time.
This Clause gives us power to make arrangements for co-ordinating our scheme with any similar scheme which the Isle of Man may decide to introduce. This is a provision for which the Isle of Man has asked. Although it will not necessarily be introducing similar legislation now, it intends to do so in future, and it is desirable for the two schemes to be linked when it does.
Much of the Isle of Man's social security system already corresponds to ours—for example, in National Insurance matters—and the power which the new Clause gives us is broadly similar to the power to make reciprocal arrangements with other countries which exists under the National Insurance legislation and also to the power which we have taken in Clause 51 in respect of Northern Ireland.

Mr. Godber: I do not think we need spend a great deal of time on this new Clause. It has brought back a breath of fresh air to our debates. It brings an entirely new point into the Bill. Most of the points which we have been considering were hammered out at great length in Committee. I must admit that the Opposition failed to note this point in Committee, and we are grateful to the Joint Parliamentary Secretary for calling our attention to it.
This is an interesting development. It makes provision for reciprocal arrangements. This is tied up in some respects with the next new Clause which deals with overseas territories. This question of reciprocity is of considerable interest. We shall want to consider the next new Clause a good deal more closely,

but with good will, as always, to the Isle of Man, we welcome this new Clause.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

Orders of the Day — New Clause.—(EMPLOYMENT UNDER GOVERNMENT OF OVERSEAS TERRITORY.)

(1) Where the Minister is satisfied that, in accordance with any such arrangements as are mentioned in the next following subsection, a payment has been, or will be, made in respect of the termination of a person's employment in any capacity under the Government of an overseas territory (in this section referred to as "the relevant Government"), and that employer's contributions within the meaning of the National Insurance Act 1946 were paid in respect of the whole or part of the period during which that person was in that employment, the Minister shall pay the appropriate sum out of the Redundancy Fund to such fund or authority as may be designated in that behalf by the relevant Government.

(2) The arrangements referred to in the preceding subsection are any arrangements made by or on behalf of the relevant Government for securing that payments by way of compensation for loss of employment in the capacity in question will be made—

(a) in circumstances which in the opinion of the Minister correspond (subject to the appropriate modifications) to those in which a right to a redundancy payment would have accrued if section 1 of this Act had applied, and
(b) on a scale which in the opinion of the Minister corresponds (subject to the appropriate modifications) to that on which a redundancy payment would have been payable if that section had applied.

(3) For the purposes of subsection (1) of this section the appropriate sum (subject to the next following subsection) is the sum appearing to the Minister to be equal to the amount of the rebate which would have been payable under Part II of this Act if such a right as is mentioned in paragraph (a) of the last preceding subsection had accrued, and such a redundancy payment as is mentioned in paragraph (b) of the last preceding subsection had been payable and had been paid.

(4) Where it appears to the Minister that such contributions as are mentioned in subsection (1) of this section were paid in respect of part (but not the whole) of the period of employment in question, the rebate which would have been payable as mentioned in the last preceding subsection shall be calculated as if the employment had been limited to that part of the period.

(5) Any accounts prepared by the Minister under section 23(2) of this Act shall show as a separate item the aggregate amount of sums paid under subsection (1) of this section


during the period to which the accounts relate.

(6) In this Act "overseas territory" means any territory or country outside the United Kingdom; and any reference to the Government of an overseas territory includes a reference to a Government constituted for two or more overseas territories and to any authority established for the purpose of providing or administering services which are common to, or relate to matter of common interest to, two or more such territories.—[Mr. Thornton.]

Brought up, and read the First time.

Mr. Thornton: I beg to move, That the Clause be read a Second time.
Perhaps we might discuss, at the same time, Amendments Nos. 40, 41 and 80. These Amendments are consequential on the new Clause.
This provision relates to employees in the United Kingdom of foreign and Commonwealth Governments—not, I must emphasise, to diplomatic staff but to the other employees of embassies or high commissions—for example, secretaries, chauffeurs, gardeners or cleaners. The provisions of the Clause are broadly parallel to those which relate to Crown servants—that is, to employees of our own Government. This is as it should be. They say, in effect, that where in circumstances equivalent to redundancy Governments make payments to employees equivalent to those under the Bill the Minister shall pay the employing Government a rebate on the payment made. The Minister has to be satisfied before doing so, however, that the case is one of redundancy and that the payment is on the scale of the Bill.
This is also the general pattern of the provisions of Clause 36 relating to Crown servants. The main difference from that Clause is that we have said in subsection (1) that the provision will be limited to employees in respect of whom employers' National Insurance contributions are paid. As I have said, we are aiming to cover people in this country employed by Governments in non-diplomatic capacities. This is a convenient way of distinguishing them from the diplomatic staff who are exempt from contribution liability. It also enables us to relate the payments, and so the rebates, to the period in respect of which Governments have been contributing to our social security scheme. This is fair and right as a measure of protection for the Redundancy fund.

Mr. Ronald Bell: I am not quite sure that I understand the nevi Clause. That sounds almost presumptuous, because some of these Clauses are so complicated that even to think that one understands them is quite an achievement. Will the Parliamentary Secretary explain which provision in the Clause confines its effect to employees in the United Kingdom? I may have missed the operative words—and I make no apology for that, because there are 39 pages of operative words, and one does the best one can.
On the face of it, the Clause seems to apply quite generally and not to be confined to the United Kingdom. Am I right? Basing myself on what the hon. Member said, I assume that it applies to employees of foreign Governments who are not covered by diplomatic immunity—am I right in thinking that?—and in respect of whom their employer makes a contribution through National Insurance stamps. If so, why do not these people receive redundancy payment in the ordinary way? Why is this special provision for them needed? If they become redundant after a qualifying period of employment, why will they not simply collect their redundancy payment?
The Clause seems to be aimed at the case in which the employing Government have their own redundancy scheme under their own law and make a redundancy payment under that scheme to this employee, and then in respect of that payment the Redundancy Fund makes a contribution to that foreign Government, that contribution. however, being limited by the number of contribution weeks in respect of which National Insurance stamps have been affixed in respect of that employee. I hope that I have that right. It is rather complicated. Is it not rather unusual that a foreign Government employing people in a non-diplomatic capacity in this country should have applying to them their own redundancy scheme in this country? Surely that is unusual. No doubt the hon. Member has more information about it than I have.
Is there any reason why in respect of our scheme they should not simply take the payment under our scheme which may be due to them and in respect of which contributions will have been paid? In that way we should leave the foreign


employing Government to make the setoff arrangement under their own scheme, no doubt deducting the amount which, on average, would be 28 per cent. which the employing Government would have to pay. On principle this is surely the way to do it rather than arrange for these payments to be made out of the Redundancy Fund to foreign Governments. I would welcome further elucidation of these points from the Parliamentary Secretary.

8.45 p.m.

Mr. Thornton: One of the problems is that Class I National Insurance contributions are paid in respect of Crown servants and our own Government employees, but we cannot compel foreign Governments represented in this country to pay the National Insurance contributions. Therefore, some of these employees—non-diplomatic staff—will not be covered by the National Insurance contributions. On the other hand, there will be some Governments who pay the National Insurance contribution and who also have schemes which are not less favourable than our own scheme.
In those circumstances we think it only right and proper, seeing that the contributors are employers to the Redundancy Fund, that they should have equal rights to draw on it, in so far as they have contributed to the fund through the National Insurance contributions. I hope that that meets the doubt raised by the hon. Gentleman.
Mr. Ronald Bell: By leave of the House, may I just ask the hon. Gentleman this? Is it the effect of the Clause, really, to make a provision, in respect of a foreign employing Government, in respect of such a man for a rebate under the Third Schedule to the Bill—a payment in the nature of a rebate under the Third Schedule? If this is the case, may I ask—it is, perhaps, self-evident, and it may be that I should know the answer—why is it that the foreign employing Government who have affixed National Insurance stamps in respect of this person, and in every way made the payments, are not in a position under the Schedule as it now stands as of right to claim that rebate? Why, in fact, is the Clause necessary?

Mr. Thornton: I could not give all the legal reasons, but I am advised that

this Clause is necessary to enable us to make these payments. I have a note here that it is confined to employment in Great Britain. The Clause can only have effect in relation to services for which National Insurance contributions have been made and services which include a spell of employment abroad which began in this country. We cannot make foreign Governments liable to make redundancy payments. Therefore, we cannot pay them rebate under the ordinary mechanism of the Bill. Perhaps that meets the point.

Mr. Hale: It may meet the hon. Gentleman's point, but may I just ask my hon. Friend a question? I thought that the point put originally by the hon. Gentleman the Member for Buckinghamshire, South (Mr. Ronald Bell) was a very clear and a very fair one. Frankly, I have not had my apprehensions removed at all.
To start with, when we were discussing diplomatic privileges in a Committee Room upstairs comparatively recently it was made clear that diplomatic privilege covered almost anybody anywhere near a foreign Government and a lot of other people, including the fellow sweeping the yard and the lady with the 36,24,36, or whatever it is, in the outer office, and that they could claim diplomatic immunity and could break our criminal law with complete impunity.
Now, there are some curious employees in respect of whom some Governments pay a contribution under our National Insurance Act and some do not, according to their will and pleasure. We have no power to enforce the provisions of the Act and our laws do not apply to persons even if they have not got diplomatic privilege; and even if they are remote from a Government they cannot establish a claim.
I confess that this is news to me. It is a rare contribution to international law and understanding to attach to a foreign Government immunity complete, not only in respect of those persons they employ in their embassy, but of anybody they may employ for the purpose of repairing the roof of the embassy. They can contract out of the Act of 1946 and fail to pay employment contributions.
I may be wrong. Maybe I have misheard. I am frequently wrong. In any case, my psychiatrist told me that I should


not get excited, but should consider things slowly and carefully. But I am puzzled that we are now saying that a Government may say, "We are having the roof repaired. These are our employees. We are paying them by the week. We shall pay National Insurance contributions, but we shall not pay contributions under the Redundancy Payments Bill", and when these foreign Governments qualify as employers who do provide a scheme but do not qualify under the Bill for payment except very limited payments which are specified in the various circumstances in the various relevant Schedules.
It may be that this is an effort by the Parliamentary draftsman—for whom I have the utmost respect; I hope that I would not be discourteous to anyone I do not know, but I suspect that he is paid by the word and not by the Bill—to provide for future possible reciprocity in which balances will be paid in this country and made good in Vladivostok? Perhaps I should not have introduced Vladivostok, because that has a high political connotation. Shall we say Nairobi? Is this merely a legislative provision for a rare, almost unprecedented and unforeseen event? If so, I would remind my hon. Friend that the Bill makes no provision whatsoever for the imminent occupation of Mars.

Mr. Kenneth Lewis: I intervene for only a moment to ask the hon. Gentleman a question arising out of new Clause No. 7, which applies to the Isle of Man. Apparently there are to be reciprocal arrangements with the Isle of Man. Subsection (6) of the Clause that we are now discussing says that "overseas territory" means
any territory or country outside the United Kingdom…
Does this Clause apply to the Isle of Man, or is to be exempted? Will it complicate matters if the Isle of Man is not exempted?

Mr. Thornton: This Clause does not refer to the Isle of Man but to foreign Governments, their embassies and their high commissions in this country in respect of their non-diplomatic staff. As I said earlier, we cannot compel a foreign Government or a Commonwealth high commission to have a redundancy fund or to pay National Insurance contributions

in respect of the people whom they employ. The Clause is, therefore, necessary if we are to have the authority to make redundancy payments to foreign Governments and high commissions in this country who operate their own redundancy schemes on a scale not less generous than our own.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

Orders of the Day — New Clause.—(IMPLIED OR CONSTRUCTIVE TERMINATION OF CONTRACT.)

(1) Where in accordance with any enactment or rule of law—

(a) any act on the part of an employer, or
(b) any event affecting an employer (including, in the case of an individual, his death),
operates so as to terminate a contract under which an employee is employed by him, that act or event shall for the purposes of this Act be treated as a termination of the contract by the employer, if apart from this subsection it would not constitute a termination of the contract by him.

(2) Where the preceding subsection applies, and the employee's contract of employment is not renewed, and he is not re-engaged under a new contract, as mentioned in section 3(2) of this Act, he shall for the purposes of this Act be taken to be dismissed by reason of redundancy if the circumstances in which the contract is not renewed and he is not re-engaged, as mentioned in the said section 3(2), are wholly or mainly attributable to one or other of the facts specified in paragraphs (a) and (b) of section 1(2) of this Act.

(3) For the purposes of the last preceding subsection, section 1(2)(a) of this Act, in so far as it relates to the employer ceasing or intending to cease to carry on the business, shall be construed as if the reference to the employer included a reference to any person to whom, in consequence of the act or event in question, power to dispose of the business has passed.

(4) In this section any reference to section 3(2) of this Act includes a reference to the said section 3(2) as applied by section 13(2) of this Act.—[The Solicitor-General.]

Brought up, and read the First time.

The Solicitor-General (Sir Dingle Foot): I beg to move, That the Clause be read a Second time.
I can deal with this Clause in a few words. Its purpose is to remedy an omission in the Bill. The Bill covers the normal case where the worker is dismissed owing to redundancy. It does not cover the case where a worker's contract of employment is terminated either by operation or by implication of law.


The Clause is designed to correct that defect.
The situation with which the Clause deals is defined in subsection (1), which says that a worker's contract of employment may be terminated by operation of law otherwise than by dismissal as defined in Clause 3. Such cases can occur where the employer is a partnership firm and the partnership is dissolved, where the employer dies, where the employing company is wound up, either compulsorily or voluntarily, and, in the case of certain employees, where the employer is adjudicated bankrupt.
Subsection (1) says, in effect, that where a contract is terminated by operation of law as a result of any of these events that shall be treated as a dismissal for the purposes of the Bill. It does not mean that the employee is automatically entitled to a redundancy payment, because subsection (2) makes it clear that he can only be so entitled if he is not re-engaged within a certain time, and the fact that he is not re-engaged is wholly or mainly attributable to redundancy, that is to say, to the circumstances defined in Clause 1(2).
The time within which the employee must be re-engaged if the termination is not to count as a dismissal is laid down in Clause 3(2)—that is, where the re-engagement is on the same terms as before, it must take place without a break in employment, and where it is on different terms any break in employment must not exceed four weeks. But in the case of the death of an employer the interval allowed in either case is eight weeks. That provision is more conveniently discussed in connection with new Clause No. 10.
Subsection (2) puts right a defect in Clause 18 which was pointed out by hon. Members opposite in Committee. That Clause refers to the situation where a business ceases because of the employer's death, but not to the situation where the business is carried on though with reduced requirements for labour, resulting in employees not being re-engaged by those carrying on the business. Subsection (3) of the new Clause has the effect that in deciding whether a business has ceased, it is the action or intentions of those who have the power to dispose of the business that is the relevant consideration.
I suggest that this is a very simple Clause. It remedies the omissions that I have referred to in the original draft. It means that an employee will not forfeit his rights under the Bill where he loses his job as a result of redundancy, and his contract is not renewed, simply because he has not been formally dismissed.

9.0 p.m.

Mr. Ronald Bell: Again, we welcome the new Clause. As the hon. and learned Member has said, it is designed to deal with certain defects in the Bill. From his appearances in Committee the Solicitor-General will realise that the Bill did not emerge from the Government wholly free of defects; in fact we had a long and fruitful Committee stage, during which we had 45 Government Amendments. Now we are ploughing our way through 10 new Government Clauses before starting on a fine crop of Government Amendments.
We do not wish to discourage the Government in well doing; indeed, we congratulate them on remedying, in subsection (1) of the new Clause, a defect in the Bill which our diligence had not discovered. We must concede that to them. Casting one's mind back it is a little amusing to remember that in Committee we spent a certain time discussing the effects of insolvency and bankruptcy, and the reserve powers of the Minister in respect of them to make payments for which he could recoup himself out of the Redundancy Fund. I do not think that it occurred to the Government and their advisers, or to the Opposition, that there might not be a technical dismissal within the definition of Clause 3 if one of those events occurred.
However, we are not in quaeri delicto in this matter, because the Government should have realised it. The Opposition are only the longstop in these matters. I congratulate the Solicitor-General on introducing the new Clause, but I must reproach him and his colleagues for not having discovered the defect earlier.
As for subsection (2), we are grateful to the Government—or rather, perhaps I should say, we note with approval that they have taken advantage of the fact that on this occasion the Opposition drew their attention to the omission. Subsections (3) and (4) are virtuous without being


harmful, which is a combination not always achieved in this life, as the hon. and learned Gentleman, with his West Country background, will appreciate.
I am, therefore, able to advise my hon. Friends that we shall accept the new Clause as an earnest of the Government's intention to remedy some of the more negligent defects in the Bill, which they so imprudently and prematurely brought forward.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

Orders of the Day — New Clause 10.—(DEATH OF EMPLOYER OR EMPLOYEE.)

The provisions of Part I of Schedule (Death of employer or of employee) to this Act shall have effect in relation to the death of an employer; and the provisions of Part II of that Schedule shall have effect in relation to the death of an employee.—[The Solicitor-General.]

Brought up, and read the First time.

The Solicitor-General: I beg to move, That the Clause be read a Second time.
Perhaps it would be for the convenience of the House to discuss, at the same time, Amendment No. 43 and the new Schedule Amendment No. 87. They all fall together.

Mr. Neil McBride: On a point of order. Would you take with this the Amendment standing in my name, Mr. Deputy-Speaker, on page 4606, as an Amendment to the proposed new Schedule, in line 193, after "employee", to insert:
who dies before the end of the period of six months beginning with the relevant date".

Mr. Deputy-Speaker: It had better be discussed now with the new Schedule, but it will have to be moved when we come to it.

The Solicitor-General: I must make it quite clear that I propose to ask the House to accept my hon. Friend's Amendment to the Schedule when we come to it.
These new provisions are necessary to clarify the position when, in the various circumstances provided for in the Bill, an employee dies when he is entitled to a redundancy payment or when his entitlement is not resolved at the time

of his death and, secondly, to amplify the provisions already made by Clause 18, relating to the death of an employer. The hon. Member for Buckinghamshire, South (Mr. Ronald Bell) said on the last Clause that the Opposition, on this Bill and, I gather, on other Measures, are acting as a sort of Parliamentary "long stop". I am sure that that is a function which they will continue to carry out for a long time ahead. I acknowledge at once that some of the points with which the Schedule deals were raised by hon. Members opposite.
The Schedule, I am afraid, is necessarily a long and complex document, because we have to deal here with a considerable number of different situations which could arise. Part I relates to the death of the employer and it provides, in paragraph (3), that, where a worker's contract is terminated by the death of his employer, he will not be entitled to a redundancy payment if he is re-engaged by the personal representatives of a deceased employer within eight weeks after the death.
If he is not re-engaged within that time and no offer of re-engagement has been made to him, he will be treated as having been dismissed for the purposes of this Bill and he will be entitled to his redundancy payment from the personal representatives, by virtue of the new Clause, "Implied or Constructive Termination of the Contract", if the fact of his not being re-engaged were attributable to redundancy—that is, either to a complete cessation of the business or to a reduction in its requirements for employees. I suggest to the House that this is a reasonable arrangement. It gives this margin of eight weeks, during which re-engagement must take effect if liability for a payment is to be avoided.
The House will appreciate that, in arriving at the figure of eight weeks, we had to hold a balance between the interests of those who may be carrying on the business after the death of the employer and who may—indeed, almost inevitably in most cases—need a certain amount of time in order to sort out the affairs of the business, and the interests of the worker himself, who cannot be expected to wait indefinitely for a possible re-engagement and should not be penalised because he has lost his employment in this way rather than in another.


I therefore suggest that eight weeks is a fair and reasonable period.
Paragraph 4 of the Schedule has the effect that a worker is not entitled to payment if he unreasonably refuses an offer of re-engagement by the personal representatives taking place within eight weeks after the employer's death where the employment offered is either on the same terms as before or, if on different terms, is suitable in relation to the worker concerned.
The effect of paragraph 5 is that, in deciding whether the employment offered is suitable or whether the worker acted reasonably in refusing it, the mere fact that the personal representatives have taken the place of the deceased employer is irrelevant, so the worker could not argue that he was reasonable in refusing the offer simply because he did not like the new management.
The Schedule deals with lay-off and short-time but provides in paragraph 7 that, if the worker has been laid off or kept on short-time immediately before the employer's death but has not served notice of claim on his employer and is then re-engaged by the personal representatives within eight weeks of the death, and if, after re-engagement, he is again laid off or kept on short time, he can aggregate the weeks after re-engagement with the weeks before, ignoring the break in his employment following the death for purposes of any claim in respect of lay-off or short-time which he may make on the personal representatives. I hope that that will commend itself as a reasonable arrangement.
Paragraphs 8 to 10 deal with cases where the worker has been laid off or kept on short-time to such an extent that he has served notice of the claim on his employer while he is still in employment and within four weeks of the time he served that notice the employer dies. Four weeks is appropriate because, if the employee is still in employment more than four weeks after service of the claim, he will normally forfeit any entitlement under the provisions for layoff and short-time.
Paragraph 12 of the Schedule ensures that any break in employment between the employer's death and re-engagement

by the personal representatives shall not in any way break the worker's continuity of employment.
Paragraph 13 deals with a somewhat different situation. It relates to employees in domestic service. One may have a case where the employer dies and the household and the occupancy of the house is taken over not by personal representatives but perhaps by someone else, maybe a member of the deceased's family. In these circumstances, supposing the re-engagement is arranged not by the personal representatives but by the new occupier of the house, it is reasonable that some provision should be made as if the personal representatives had been responsible for the new engagement.
I come now to Part II of the Schedule, which deals with the death of the employee. This makes a number of provisions which I hope that the House will approve. It provides, first, that if the worker dies during the notice, on the expiry of which he would have been entitled to a payment, his personal representatives will be entitled to a payment in respect of his service up to the time of his death. Secondly, if he becomes redundant and is offered alternative work and dies before accepting it, his personal representatives may pursue a claim with the tribunal if they think that he would have been reasonable in refusing the offer.
The effect of paragraph 18 is that if a worker has been given notice by his employer but before the notice expires he wants to leave and has given notice to that effect, and if he dies, his personal representatives may pursue with the tribunal his claim for a redundancy payment under the provisions of Clause 4.
Paragraph 19 deals with short-time and lay-off, and paragraph 20 provides that in general, by virtue of Clause 21, employees must claim payment not later than six months after they have been dismissed. However, paragraph 20 provides that where an employee dies his personal representatives are allowed—up to 12 months instead of six months—to lodge a claim. It is in respect of this provision that my hon. Friend the Member for Swansea, East (Mr. McBride) is proposing an Amendment. I hope that the House will agree that the Schedule makes clear and reasonable arrangements to meet the various contingencies which are contemplated.

Mr. Ronald Bell: This is a formidable addition to the Bill. I have already referred to the volume of Government Amendments, both in Committee and on Report, but this outdoes all previous additions and additions which are to follow—no less than 210 lines being added to the Bill in this one proposal, which seems to cover almost every imaginable contingency, except that of employer and employee dying at the same moment. Perhaps the Solicitor-General would care to tell us what would happen in that extraordinary circumstance. Would the law of property legislation come into this?
I have no criticism of the provisions of the new Schedule, because, of course, the new Clause is purely and simply a hook on which to hang the Schedule. All I can say about it is that it is remarkable that when the Government brought the Bill forward they should have overlooked all the difficulties which are dealt with by this proposal. The Solicitor-General generously conceded that some of these difficulties were pointed out in Committee by my hon. Friends and me. We feel that we have done a valuable job on the Bill and I am a little worried—and I can see that the Parliamentary Secretary is a little worried, too—lest the vigilance of the Opposition may not have covered all the defects in the Measure.
When we reflect that in Committee there were 100 Amendments, 45 of them tabled by the Government, and that at this stage there are about 30 pages of Amendments—almost all of which relate to points which the Opposition picked up—we cannot help wondering whether there have been oversights, inadvertencies, anomalies, and drafting mistakes which have still been overlooked. I am bound, in a spirit of humility, to point out that there may be dozens of others which have been missed. When we come to this Schedule—which contains a fair sprinkling of points which my hon. Friends and I raised in Committee—we are bound to wonder how many other difficulties will arise in the administration of the Bill. I must not allow speculation to go too far, even on the Second Reading of a new Clause, when we are allowed rather more latitude than when considering an Amendment. I repeat that we have no words of opposition to address to the

Government about these provisions. They are sensible and deal in a practical way with many of the points which we raised.
The period of eight weeks is obviously setting the consideration of one side against the consideration of the other. That is reasonable, and I therefore commend the new Schedule to my hon. Friend's. It is perhaps not inappropriate that, on behalf of the Government, I should congratulate them for the good work they have done as the architects, so to speak, of this Schedule. I must address to the Parliamentary Secretary and Solicitor-General a gentle reproach for bringing forward a Bill with so many gaps and oversights which might have to be filled by an enormously protracted Report stage which we would be having were my hon. Friends and I not trying to be thoroughly co-operative and not wishing to make party points. As I say, we wish to be reasonable in our consideration of the Bill.

9.15 p.m.

Mr. Geoffrey Howe: I want to speak on a less enthusiastic note than my hon. Friend has done. I agree that the Opposition bear some responsibility for the inspiration of this new Schedule, but I hesitate to say that we are the architects. Let us leave that responsibility to the Government—there may well still be defects. In considering the practical application of the arrangements when the employer has died, I doubt whether a period of eight weeks is long enough. I know that the employee wants some certainty, but we must relate these provisions to the smallest and humblest of employers, whose personal representatives may scarcely know that they are the personal representatives.
An employer may die intestate, but his estate may be such that the only function of the personal representatives would be to spring into action to take the appropriate steps under this Bill. In such a case I doubt whether anything will happen. The inflexibility of the eight-week provision may well give rise to real hardship to the personal representatives when linked to the comparatively formal steps they have to take to prevent the estate later being saddled with responsibility for redundancy payments.
I suggest that something more flexible is needed to deal with the kind of


situation envisaged. I was attracted by the notion behind new Clause No. 9 dealing with implied or constructive termination of contract. In that connection, the Solicitor-General might well bear in mind the situation under the Rent Acts, when implications can or cannot arise as to the creation of a new tenancy in favour of the heir or personal representative of a deceased tenant. It is there possible to imply the creation of a brand-new tenancy in favour of someone who would otherwise be able to claim as a statutory tenant.
In many cases when the existence of this Measure will probably be unknown to the personal representatives of the deceased employer, when the niceties of this new Schedule will be unknown, and when one would expect the employment to continue just as before, no one will bother to take the formal steps laid down in the new Schedule yet, because of that, a claim for redundancy payment may raise its head later. I ask the Government to look again at the emphasis on paper formality at every stage throughout the Bill, and, in particular, in this Schedule. May there not be room for an added period of grace, or the implication of re-engagement without express contractual provision?

Sir Tatton Brinton: I wish to refer to Part II of the new Schedule in relation to the practices which the Government themselves follow in regard to their own employees. I agree with the provisions of the Schedule, which give the heirs of a deceased employee the right as it were to inherit his redundancy payment if it would have become payable had he not died. That is perfectly fair, but I ask Ministers to compare these provisions they are making for payments within industry with those which the Government themselves in all our joint names make to the heirs and assigns of their own servants, notably the Armed Forces.
There are many cases in which gratuities have become payable to men who have signed on, but their widows are not eligible for the full amount of the gratuity which those men have earned as of right. Yet here we have a right which arises only because of the redundancy which because of death does not take place. I

draw attention to this anomaly. The Government ought to look at it because the provisions they are making here, while fair enough themselves, compare very favourably with what the Government do for our own servants in the Armed Forces.

Mr. Godber: I support my hon. Friend the Member for Kidderminster (Sir T. Brinton). This is a point which had not occurred to me, but it seems to be of great significance. There is a point of principle here. If we are to impose on employers generally responsibilities of this kind it is up to the Government to see that they set an example in this regard as in others.
In most employment practices one can safely say that in Government service we seek to set an example for others to follow. Whatever party has been in power that has been accepted. The point made by my hon. Friend is of considerable significance. In this Bill we are imposing responsibilities on all other types of employer. They are responsible for providing sums and that is accepted and welcomed on both sides of the House, but if there is a comparison in which the Government do not come out favourably, particularly in regard to the Armed Forces, it ought to be looked into. I hope the point will be carefully looked into.
This is a very detailed and complicated proposal. We accept the principles, but will discuss the separate Amendments later.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

Orders of the Day — Clause 1.—(GENERAL PROVISIONS AS TO RIGHT TO REDUNDANCY PAYMENT.)

Mr. Thornton: I beg to move Amendment No. 1, Clause I, in page 1, line 9, after "employer", insert "by reason of redundancy".
It would perhaps be for the convenience of the House if with this Amendment we could discuss Amendments Nos. 2, 3, 4, 5, 6, 8, 10, 24, 25, 26 and 46, all of which are related to the same point.

Mr. Speaker: If the House so pleases.

Mr. Thornton: These are merely drafting Amendments designed to clarify our


intentions as regards entitlement following lay-off or short-time. As Clause 1 is at present drafted, dismissal, lay-off and short-time are all dealt with together. This has the result that before entitlement to a payment can arise from lay-off and short-time two conditions must be fulfilled. First, the lay-off or short-time must have continued for the specified period and, secondly, it must have been attributable to redundancy as that term is defined in subsection (2).
It has always been our intention—we have made this clear throughout our consultations with industry—that once a worker has been laid off or kept on short-time for the specified period, and if there is no reasonable prospect of an early resumption of normal working, the worker should become eligible for a redundancy payment. There is the special exception which is provided for in new Clause 4 (3) that no entitlement can arise where lay-off or short-time is due to an industrial dispute.
We have hitherto taken the view that our intentions as I have just described them were adequately reflected in the drafting of Clause 1, because lay-off and short-time would invariably be attributable to redundancy in the same sense that this is defined in subsection (2). Subsection (2) says in effect that for something to be caused by redundancy it must be attributable to a cessation of the business or to a cessation or diminution in the requirements of the business for work. We had taken the view that short-time or lay-off could always be said to be attributable to a cessation or diminuation for the time being in the employer's requirement for a worker.
I am advised, however, that it is possible that the courts might place a diffent interpretation on Clause 1 as it stands. The difficulty is that the stipulation that the lay-off or short-time must be attributable to the factors defined in subsection (2) creates the assumption that these things could be attributable to some other causes. This might, for example, lead the courts to interpret "cessation or diminution" as meaning a permanent or long-term cessation or diminution, as distinct from a temporary or short-term fall in the requirements for labour. Admittedly, it is difficult to see how lay-off or short-time could be said to be attributable to a permanent fall in

requirements for labour. By their very nature, lay-off and short-time are resorted to in order to cope with a strictly temporary fluctuation. Nevertheless, I am advised that the present drafting does not make our intentions sufficiently clear.
I hope the House would not dissent from the proposition that if lay-off or short-time continues for long enough and if there is no early prospect of resumption of normal working, the right to redundancy payment should accrue. I am convinced that it would not be practicable to try to distinguish between different kinds of lay-off and short-time according to the factors that have caused them. Apart from the obvious difficulties of establishing what was the cause of any particular case, from the point of view of the worker it makes no difference at all whatever the cause.
Part of the Bill's function is to prevent an employer from evading liability for a redundancy payment by laying off a worker for an indefinite period, or keeping him on short-time, in the hope that he will give up and leave of his own accord and so forfeit any right to payment. If we were to contemplate providing entitlement to payment only where lay-off or short-time resulted from a particular cause, we should be opening the door to the sort of abuse which I have mentioned.
9.30 p.m.
The Amendments make our intention clear. Amendments Nos. 1 to 6, in effect, separate the two concepts of dismissal, on the one hand, and lay-off and short-time on the other. The condition that entitlement depends on there having been redundancy would be confined to cases of dismissal and the only condition as regards short-time and lay-off would be that they should have continued to the extent specified in the new Clause which is to replace Clause 6 and that the other requirements of the new Clause should have been complied with.
Amendments Nos. 7, 8 and 10 delete the words in Clause 1(2) which relate only to lay-off and short-time and are now no longer necessary in that place. Amendment No. 46 makes it clear that references in Clause 1 to "ceasing" or "diminishing" include cessation or


diminution which is temporary as well as that which is permanent and include a cessation or diminution irrespective of what has caused it.
Amendments Nos. 24 to 26, relating to Clause 9, deal with references to tribunals and are a straight consequence of the Amendments to Clause 1. I hope the House will accept that these changes will remove a possible source of confusion and make quite clear what is generally agreed should be the effect of the Bill as regards lay-off and short-time.

Mr. Godber: The Parliamentary Secretary has put forward a whole series of Amendments, but the first is the important one and it is that to which I shall address my remarks. I do not intend to be drawn into whether cessation or diminution should be temporary or permanent, but this is obviously an important matter and I am sure that the Parliamentary draftsmen were right to cover it.
The Parliamentary Secretary has moved the first Amendment for a particular reason which I accept. It has clarified the position of short-time and lay-off, and, although our approaches to short-time may differ, we want to be quite clear about what is being provided. I said on a number of occasions in Standing Committee that I was worried that there might be confusion about certain aspects of the Bill and that people might be confused about their entitlements and that that might lead to bad feeling and the very reverse of what we all want to achieve by the Bill. I welcome the Amendment for the reason that it will clarify the position. But I also welcome it much more from another point of view in that the Parliamentary Secretary has done something which will certainly help me and which, I hope, will help others. He has brought right to the forefront of Clause 1(1) the real reason for the conditions under which redundancy payment is to be granted.
As I made clear in our discussions in Standing Committee, particularly when we were dealing with Clause 2, I was never happy about the general exclusions or that subsection (1) was sufficiently clear about the limitations on entitlement to redundancy payment on dismissal.

By bringing it forward right at the start and saying that it must be dismissal by reason of redundancy makes it more clear to everybody concerned. Although that may not have been the intention, I welcome the Amendment for that reason in particular.
It will help in the interpretation of Clause 2 also to have the limitation, "by reason of redundancy", put immediately after the reference to dismissal in Clause 1. We shall discuss one or two points on Clause 2 in due course, so I shall not attempt to anticipate it, but this point has relevance to the anxiety which I felt, that the exclusions were not sufficiently wide. The introduction of the words "by reason of redundancy" in Clause 1 will assist those who are later concerned with the implementation of the Bill. Therefore, although the change is brought about for an entirely different reason, it is for this reason rather than any other that I welcome it, although, as I say, I have no objection to the reason which the hon. Gentleman gave. I welcome this and the subsequent Amendments connected with it.

Amendment agreed to.

Further Amendments made: In Clause 1, page 1, line 11, leave out "section 6(1) of this Act" and insert:
subsection (1) of section (Right to redundancy payment by reason of lay-off or short-time) of this Act and complies with the requirements of that section".

In line 12, leave out from beginning to "then" in line 13.

In page 2, line 4, leave out from "dismissed" to "shall" in line 5.

In line 5, leave out from "dismissed" to "by" in line 6.

In line 7, leave out "lay-off or short-time".

In line 11, leave out "is or".

In line 13, leave out "is or".—[Mr. Thornton.]

Mr. Thornton: I beg to move Amendment No. 9, Clause 1, in page 2, line 15, to leave out from "for" to "in" in line 17 and to insert:
employees to carry out work of a particular kind, or for employees to carry out work of a particular kind".
I suggest, Mr. Speaker, that it might be for the convenience of the House to take


at the same time Amendment No. 76. Both Amendments relate to the meaning of "redundancy".

Mr. Speaker: If the House so pleases.

Mr. Thornton: These Amendments are designed to make clear that the definition which we have in the Bill covers certain cases of redundancy which would at present not be caught by it. They are cases which everyone would agree were redundancies in the ordinary sense of the word and would be treated as such under existing redundancy policies in industry. They in no way alter the basic concept of redundancy in the Bill, that is, broadly speaking, the disappearance of a job as opposed to any form of discharge of a worker where the actual number of jobs remains the same as before.
Amendment No. 9 is designed to make the definition wide enough to cover the two types of case. Let us suppose that an employer decides that the same amount of work can be done by fewer workers, perhaps because the pace of work is speeded up or because of a change in the way the work is organised. The same amount of work will continue to be done, but, because it can be done by fewer workers, some workers are dismissed. The Amendment ensures that such a case will be covered by the definition because it makes the test of redundancy whether there has been a reduction in the requirement for workers rather than for work.
Second, there is the case in which employee A is dismissed not because there is any reduction in the employer's requirement for work of the kind done by him but because there has been a reduction in the requirement for some other kind of work, with the result that employee B has become surplus and has been transferred to the work previously done by A and so has displaced A, who is then dismissed. For instance, there might be a reduction in the requirements for foremen, and a junior foreman might consequently be demoted to production work, with the result that a production worker became surplus and was dismissed. In American practice, I understand that is referred to as "bumping", and it is quite likely to happen on the generally accepted principle in industry of "last in, first out". I am sure we agree that in such a case the production worker

should be regarded as redundant for the purposes of the Bill.

Mr. Keith Stainton: Could the Parliamentary Secretary develop his theory of "bumping" a little? He has described a man who is completely pushed out of a job, but he did not explain the case of a sub-foreman who is demoted to a production position. Does that constitute redundancy in terms of the Bill?

Mr. Thornton: We have always intended that it should apply. If in the case I have indicated a foreman becomes surplus to requirements and, because he is a long-standing worker, is offered another job and accepts it, but, as a result, he replaces a production worker who then has to go out, we want to make it quite clear that a redundant worker in those circumstances, at the end of the chain, shall be entitled to redundancy pay under the Bill. That is our intention.

Mr. John Page: In giving that example of the link in the chain of the junior foreman, one assumes that the junior foreman has accepted the job on the production line again and has elected to say that he wishes to accept it rather than contest whether that is an alteration in the job he was doing and therefore might afford him an opportunity to claim redundancy pay. The foreman, in this instance, had he wished, could have possibly contested the fact that he was given the other job. Am I right?

Mr. Thornton: I think the hon. Gentleman is quite right. I am assuming the position, which I think will happen in practice, that a junior foreman demoted because his services are no longer required as a junior foreman would elect to go back on to the production line rather than seek his redundancy pay and move off to some other employer. Those cases will happen; I do not think there is any doubt about that. I am sure that the House will agree that that would be a case of redundancy, and we want to make sure that such a case is caught by the Bill.
The Amendment allows us to cover this case by a redrafted subsection (2,b) so as to refer to a reduction in requirements for
employees to do work of a particular kind
The test becomes a reduction in the employer's requirements for employees to


do a particular kind of work; that is to say, his demands for such employees anywhere in his business.
Amendment No. 76, which relates to Clause 42, is intended to cover a similar situation in the case of associated companies, as that term is defined in the Clause. I think it is clearly right that if we are treating associated companies as one employer for purposes of offers of alternative work—and this is the effect of Clause 42 as it stands—then we should similarly treat them as one employer for this purpose, so that workers displaced at one company because of transfers resulting from redundancy elsewhere in the group, shall be treated as redundant and be entitled to payments.
Those are the purposes and the intentions of the Amendments.

Mr. Godber: Again, we welcome the intention of the Joint Parliamentary Secretary which seems to be wholly honourable. I admit that when I first saw the Amendment on the Notice Paper I was a little puzzled in that it seemed to be repeating itself twice over. However, on studying it, I find that there is some semblance of sense in its wording. No doubt it will have the effect intended.
It is right that greater flexibility should be provided in cases of this kind. I was interested in the example quoted by my hon. Friend the Member for Sudbury and Woodbridge (Mr. Stainton). It seems to me that in that case there is one redundancy. The redundancy could arise in regard to a junior foreman if he chose to leave. It could arise for someone else if he chooses downgrading at the next grade. But there is one redundancy. The purpose of the Amendment is to provide flexibility so that either party is entitled to his redundancy payment even though the junior foreman has changed his type of employment. That would seem to be sensible and right, and we on this side would not resist it.
On the second Amendment, the introduction of the idea of associated companies was an improvement. It is right, if we are making this provision, that it should go in both places. I recommend my hon. Friends to accept this Amendment.

9.30 p.m.

Mr. John Page: There is some doubt about the future of the Grand National, but if it is run again I would put a lot of money on the Joint Parliamentary Secretary because I have seldom seen a man take so many large fences so quickly and without, apparently, suffering damage on the way.
On the first Amendment, I wish to ask about the question of the means by which an employee who has been served with a counter-notice by his employer can bring the notice to the attention of the tribunal. Earlier the Parliamentary Secretary referred to the question of going to the tribunal in questions of doubt as to whether redundancy payments are allowable or not. After a counter-notice has been issued by an employer, what steps does the employee have to take to have his case heard? Could the hon. Gentleman tell us what the mechanics are and what means the man has of applying for his case to be heard by a tribunal?

Mr. Thornton: If a counter-notice is served, it is the responsibility of the employer to make the approach to the tribunal. I will correct this later if I am wrong.

Amendment agreed to.

Further Amendment made: Clause 1, in page 2, line 18, leave out "is or".—[Mr. Thornton.]

Orders of the Day — Clause 2.—(GENERAL EXCLUSIONS FROM RIGHT TO REDUNDANCY PAYMENT.)

Mr. Thornton: I beg to move Amendment No. 11 Clause 2, in page 2, line 32, at the end to insert:
or
(c) by giving notice (not being such shorter notice as is mentioned in paragraph (b) of this subsection) which includes, or is accompanied by, a statement in writing that the employer would, by reason of the employee's conduct, be entitled to terminate the contract without notice.
It might be convenient to discuss at the same time Amendments Nos. 107 and 108.

Mr. Speaker: If the House so pleases.

Mr. Thornton: Amendment No. 11 fills a gap in subsection (2) of Clause 2 which was pointed out by hon. Members opposite in Committee. The purpose of subsection (2) is to make it clear beyond


doubt that an employee rightly dismissed for misconduct, except when he is already under notice, in which case the matter would be dealt with under Clause 10, is not to be entitled to redundancy payment, irrespective of whether there may also have been redundancy at the time. Paragraphs (a) and (b) of the subsection provide respectively for the situation in which the employer dismisses without notice or with less notice than he would otherwise have been required to give if the worker had not misbehaved.
The subsection does not, however, provide for the case in which the employer decides to let the employee work out the full notice to which he otherwise would have been entitled, despite his misconduct. The point was made in Committee that if the employer so chooses we should not run any risk of his being penalised under the Bill. It is this gap which the Amendment fills.

Mr. Speaker: The hon. Member said that he wished the House to discuss, at the same time, Amendments Nos. 107 and 108. Unfortunately, I have not yet been able to find them on the Notice Paper.

Mr. Thornton: They are on page 4593, Sir.

Mr. Speaker: It would be a great help if in future Departments would give a hint of the proposals which they intend to make. There will then be no delay.

Mr. Godber: I do not think that we need spend any time on this Amendment. The Parliamentary Secretary has echoed the arguments which were used in Committee. We are very glad that we convinced him so completely. He has accepted the point in full and I thank him for doing so.

Amendment agreed to.

Mr. Thornton: I beg to move Amendment No. 13, Clause 2, in page 3, line 15, to leave out from "offer" to "constitutes" in line 16.
This Amendment arises out of an undertaking which I gave to the Standing Committee to look again at the drafting of this subsection. Hon. Members who served on the Committee may recall that that undertaking was given without commitment. I do not claim for a moment that the Amendment goes all the way to

meet the case which was argued by the Opposition. It is not intended to do so. But it goes some of the way, and it is in any case justified on its own merits.
Clause 2(4) excludes from the right to a payment any employee who unreasonably refuses an offer of suitable alternative work with the same employer. The offer has to be made in writing before the existing contract comes to an end and the new work has to begin within four weeks.
The subsection relates only to the case in which the terms of the contract being offered to the worker differ from the terms of the contract under which he has hitherto been engaged. It is described by lines 10 to 13 on page 3 of the Bill as a case in which the provisions of the contract being offered differ wholly or in part from those of the previous contract as to the capacity and place in which the employee will be employed and as to the other terms and conditions of employment.
If there is any dispute as to whether the employment offered is suitable, it will be for the tribunal to decide. But without the deletion of the words in the Amendment, there would be some danger that the tribunal's attention would be focused too narrowly on only the capacity in which it was proposed to employ the worker and the place where he was to work, to the exclusion of other terms and conditions. I think that it will be generally agreed that tribunals ought to have regard to all the relevant circumstances of the case, which will include any relevant custom or practice in the industry or occupation which is applicable.
If we delete these words, the tribunal will be free to have regard to all these factors and will not be encouraged by the wording of the Act to give undue emphasis to any one of them.
In Committee, hon. Members opposite urged that tribunals, in considering whether or not an offer of alternative employment was suitable, should have regard to the custom and practice of the industry, and that attention to this should be specifically directed in the Bill. We felt and still feel that if we tried to spell out the various criteria to which the tribunals should have regard that would serve only to hamper their freedom in considering all the relevant factors


and giving due weight to each of them in coming to their decisions.
This Amendment will help to ensure that tribunals do this and are left free to take account of all the relevant considerations in assessing the suitability of alternative employment. I hope that the Opposition can accept the Amendment.

Mr. Godber: Here, again, I welcome the Parliamentary Secretary's conversion, but on this occasion I cannot welcome it quite so wholeheartedly, because he has not gone the full way. On other Amendments he has gone the full distance to meet us. On this occasion he has been somewhat niggardly. He has made a concession—I grant that and I welcome it. Any concession, however small, any acknowledgment of the truth given to him from our side, we welcome, but on this occasion I think that it would have been better if he had gone a little further. I do not propose to debate the matter at any length because I think, Mr. Speaker, my hon. Friend the Member for Kidderminster (Sir T. Brinton) hopes to catch your eye on another Amendment to deal with another aspect of this matter.
However, we wanted to see that the tribunals, under Clause 2(4,a), had the widest opportunity for discretion, and we felt that this was narrowed down too far, particularly the reference to "capacity and place". We thought that that was not appropriate. Those words as they appear in that paragraph are now being deleted—and we welcome it—by this Amendment, but would it not be right also to delete the reference to "capacity and place" where it comes higher up in the subsection? It reads:
An employee shall not be entitled to a redundancy payment by reason of dismissal if before the relevant date the employer has made to him an offer in writing to renew his contract of employment, or to re-engage him under a new contract, so that in accordance with the particulars specified in the offer the provisions of the contract as renewed, or of the new contract…as to the capacity and place in which he would be employed….
That is subject now to the deletion of words by this Amendment and there would seem to be no point now in keeping "capacity and place" higher up. I ask the hon. Gentleman to have a look at that to see whether it cannot perfectly

well be deleted, and if the hon. Gentleman accepts the point he might have it dealt with elsewhere.
The Amendment goes some way to meet us, and I think it is helpful, but it does not go far enough, because we wanted more discretion to be allowed. So I give this very qualified acceptance of what the hon. Gentleman has said, and I would ask him to look at the point which I have raised.

Mr. John Page: I would like the Parliamentary Secretary to consider his own words when he was commending this Amendment. I wish he had used words such as the new position "appears to be in accordance with the usual terms and conditions of the industry"—the particular industry concerned. I wish he had used words to that effect.
I think it most important that the attention of the tribunals should be drawn to the words of the Parliamentary Secretary at this important stage. Secondly, so that they shall not have to look back at this debate, the hon. Gentleman should try to widen the Amendment at a later stage by inserting some of the words that he has used tonight. If he did that we would all be very much happier.

It being Ten o'clock, the debate stood adjourned.

Ordered,
That the Proceedings on the Redundancy Payments Bill may be entered upon and proceeded with at this day's Sitting at any hour, though opposed.—[Mr. Lawson.]

Question again proposed, That the words proposed to be left out stand part of the Bill.

Question put and negatived.

Sir T. Brinton: I beg to move Amendment No. 14, Clause 2, in page 3, line 16, to leave out from "constitutes" to the end of line 17, and to insert:
a reasonable offer of suitable alternative employment".
We touched on this subject during the short debate on the last Amendment. The point here is that throughout the discussions on this subsection in Committee my hon. Friends and I felt that there was an undue restriction on the future power of tribunals when considering the question of justice and equity in relation to the Clause.
The Clause deals with the restrictions on the right to claim redundancy payment. Subsection (1) deals with the question of superannuation. Subsection (2) deals with the question of a rightful justifiable dismissal. Subsection (3) deals with the offer of an identical job, and subsection (4) is really the important one, because it regulates the offering of a job which, while not the same, is at least reasonably comparable.
The Parliamentary Secretary, who handled this matter in Committee, throughout displayed what to my hon. Friends and myself was a curious attitude to this whole question. He maintained that this must be related solely to the requirements of the employee, which is what the Clause as it stands says. The hon. Gentleman dealt with this in a number of statements in Committee, and he has, by implication, dealt with it in his remarks on the previous Amendment.
During the Committee stage we moved three Amendments of much the same sense to this subsection. The first Amendment was the same as the one I have just moved. The second was a similar one. I shall not go into it now, but it had much the same effect. The Parliamentary Secretary will remember that it merely sought to introduce "in all the circumstances" or something like that. The third Amendment left standing the words which are bothering us somewhat, namely,
an offer of suitable employment in relation to the employee
but sought to add
and to the industry in which he is employed".
In other words, it brought in the question already touched on by the hon. Gentleman, that of custom and practice within the industry.
All those Amendments were fairly firmly rejected, and during the final debate on them the hon. Gentleman said:
The point is that the job offered must be in relation to the employee because he is going to be the man who will do the job. Neither the employee nor any one else is going to do the job."—[OFFICIAL REPORT, Standing Committee D, 11th May, 1965; c. 136.]
He rejected the suggestion that any interests of the employer should be considered. The point was not strongly pressed, even though it seemed to some

of us that the logic of his reasoning was not very sound. It may be true that the employee does the job, but it is the employer who pays him to do it, and I would have thought that his circumstances might have some bearing on the decision of a tribunal.
Another question raised in Committee concerned pay. The Bill contains no directions as to what a tribunal should do in respect of the important question of how much a man earns—

Mr. Deputy-Speaker (Dr. Horace King): Order. The hon. Member must not now traverse all the debates which took place in Committee. He must address himself to the Amendment, and that means to the question of "reasonable".

Sir T. Brinton: I thank you, Mr. Deputy-Speaker. I will endeavour to do so. I was trying to trace out the reasons why we are pursuing this point, which was widely discussed in Committee. Presumably Mr. Speaker accepted the need for its rediscussion.
We covered the question of the difficulties that might arise over pay and retraining, but the principal point made was that which the Parliamentary Secretary has recently touched upon, namely, the custom within an industry. Throughout our discussions he has repeatedly admitted that the custom and practice of an industry must be taken into account by a tribunal in arriving at a decision under the Clause. We all agree about that. Yet he refuses to accept an Amendment which would ensure that this would be done. At the moment, any tribunal considering the question is apparently confined solely to considering the position of the employee.
As the Parliamentary Secretary has said, this is one of the most important considerations, but it is not the only one. A man might establish one part of his case, namely, that an offer of alternative employment was not suitable to him, because he did not like it, or did not feel able to carry it out, or did not see why he should accept a lower rate of pay, and as the Clause now stands the tribunal could consider only that aspect, although the Parliamentary Secretary has said that the custom and practice of the trade—which presumably includes rates of pay


and conditions within the trade—ought to be and will be taken into account by the tribunal.
How is the tribunal to do so, unless the Amendment is accepted? The Parliamentary Secretary has so frequently accepted the logic of this position, by implication, that we cannot understand why he insists on relating the decision of the tribunal solely to a circumscribed area, namely, the interests of the employee alone. This is not fair to all the other interests involved. We therefore ask him to reconsider the question. He has said that he has given us part of our point in a previous Amendment, but that does not go far enough. We do not want tribunals to be circumscribed, however wise they may be. We hope that they will interpret literally the words laid down in the Bill by the legislature, and will not seek to impose their own interpretations on them.

Mr. Kenneth Lewis: I hope that the Parliamentary Secretary will reconsider the Amendment, which mentions the word "reasonable" and which is reasonable. As it stands at the moment a built-in advantage is given by the Minister to the "awkward squad". [HON. MEMBERS: "No."] Yes. There will be no difficulty with most workpeople over this Clause and most of the difficulties which arise will, in any case, be ironed out by the tribunal. But the "awkward squad" can then go to the tribunal and the tribunal will have no scope, as the Clause stands.
There is no latitude, because the tribunal has to accept that, if the workman does not want a particular job, he can manufacture any number of reasons why it is not acceptable to him. As the wording of the subsection now stands, any man who is awkward will then be able to leave the tribunal, go back to his employer and say that he is—

Mr. Ness Edwards: Does not that equally apply to the awkward employer?

Mr. Lewis: Yes, but if the Amendment is accepted it would cover both the awkward employer—if there is one—and the awkward workman. The Amendment leaves the judgment entirely with the tribunal. It gives the tribunal the kind of scope which I should have thought would have been necessary in a

Bill of this kind and is justification for setting up the tribunal at all.

Mr. Howe: While the Amendment made before this eliminated one of the difficulties created by the Clause, I suggest to the Parliamentary Secretary that he may now be leaping out of one kind of frying pan into another kind of fire. The nature of the fire was indicated by him in the debate in Committee, when he said, of the general intention which the Government are obviously trying to achieve, that
… it would be wrong to try to lay down rules that would limit the discretion of the tribunals or unduly influence them in one direction or another in coming to a common sense decision."—[OFFICIAL REPORT, Standing Committee D, 13th May, 1965; c. 145.]
With the elimination of the previous ten words or so in lines 15 and 16, the Clause as it now stands, with no reference to the word "reasonable", could work harmfully and adversely for the employee.
If one considers the bare words, "constitutes an offer of suitable employment in relation to the employee" one sees that it does precisely what the Parliamentary Secretary said was not to be done. It enjoins a tribunal to look at only one aspect and with very narrow terms of reference. It has merely to consider, without regard to capacity or place—those words are now gone—whether the offer constitutes an offer of reasonable employment in relation to the employee, in other words, whether it is appropriate to his aptitude—conceivably, though not certainly, appropriate to his previous wages—but it may consider none of the other matters which ought reasonably to be considered.
I suggest that the absence of any reference to "reasonable" might lead the tribunals not only away from factors on the employer's side which ought to be considered, but could lead it away from factors on the employee's side. Mere consideration of suitability in relation to the employee enjoins the narrowest possible consideration. I would suggest, as a possible—

Mr. Thornton: While this does provide for the narrowest possible consideration, would the hon. Gentleman not agree that it gives the widest possible discretion to the tribunal?

Hon. Members: No.

10.15 p.m.

Mr. Howe: No. That is exactly the point. I do not want to weary the House by pursuing it too far, but there is no tendentious issue between us on this. The hon. Gentleman repeated often in Standing Committee that he wants to give wide discretion to the tribunal. Our proposition is that he has eliminated one narrowness by deleting capacity and place and that, by accepting our Amendment, he would retain the narrowness of the Clause but widen the tribunal's discretion.
It is a consideration which arises in many statutory provisions. In the rent legislation there are two considerations. When a tenant is being offered suitable alternative accommodation the court must be satisfied that it is suitable and that it is reasonable to make a possession order against him.
Under this Clause as it stands, the discretion is narrowed rather than widened and if the Government are in compromising mood about this they might like to consider, perhaps in another place, a reconciliation between the two possible suggestions by using the words proposed by us while retaining their own favourite provision in relation to the employee. Thus, the provision could stipulate a reasonable offer of suitable alternative employment in relation to the employee. That would achieve the breadth of discretion that the hon. Gentleman wants and retain the emphasis on the employee's position, being more effective and appropriate than the narrow words now used.

Mr. Thornton: On the previous Amendment, I indicated that the deletion of the words concerned was the result of our reconsideration of the arguments advanced by hon. Members opposite in Committee. The object of that Amendment was to ensure that, in considering whether or not the employment offered was suitable to the employee, the tribunal's discretion to look at all the relevant circumstances of the case should not in any way be circumscribed.
We now think that we have the provision right. In the light of that and our explanation I hope that hon. Members opposite will feel able to withdraw the Amendment. But if they persist I must adhere strongly to the position that the

Amendment would undermine the objective that the offer of employment by an employer should be suitable in relation to the employee. To that proposition I stick hard.
The effect of the Amendment would be that, in the event of a dispute, the tribunal would have to consider whether the offer was reasonable not only in relation to the employee but also in relation to the circumstances of the employer. This would be quite wrong. The difficulties that the employer happened to be in at the time should not be relevant to the issue. If they were, we should get all kinds of anomalies and injustices.
Suppose that the employer's trade has dropped of and the best offer of employment he can make to a redundant worker is far less favourable than the terms on which he has hitherto been engaged.

Mr. Howe: I can see the force of the argument that some concentration needs to be directed to the position of the employee but would not the hon. Gentleman recognise that there is a middle way which still deserves consideration? This would incorporate the use of the words "reasonable" and "alternative" as well as the words that he regards as important in relation to the employee.

Mr. Thornton: I would give consideration to it, but I could certainly not give any promise because I think that our definition is as fair as we can get and that it will leave a very wide discretion to the tribunal in relation to the employee—and it must be in relation to the employee.
As I was saying, an employer whose work has dropped off may offer a worker employment that is reasonable from the employer's point of view but completely unreasonable from the worker's point of view. It may be the best that the employer can possibly do, but it would not be good enough for the employee.

Sir Harmar Nicholls: The hon. Gentleman is putting a rather strong point in a quiet way. Should not all the circumstances be taken into account? That is what the Amendment suggests. It is true that there should be some bias, if the hon. Gentleman likes, in favour of the employee but to suggest that the overriding circumstances, which are not necessarily the fault of the employer, must be


disregarded in order to give special bias to the employee is not reasonable. I would have thought that the hon. Gentleman could accept a point where all circumstances of the employer were taken into account without this rather unreasonable bias as he explains it.

Mr. Thornton: I suggest that all the circumstances should be taken into account in determining whether a job is suitable for the worker concerned and not suitable for anyone else. I emphasise that this is not a question of the employee's own assessment of the offer of the employee giving a subjective opinion against the opinion of his employer. It is a matter of an employee, say a skilled fitter, being in the position of his employer's business having run down so that his job has disappeared. In such circumstances he might be offered a job which no skilled fitter could reasonably, in the opinion of an independent tribunal, accept, either because of the nature of the work or the wages and conditions attaching to the job.
In those circumstances, the Bill says that the employee is redundant and that his employer must pay. I suggest that this is the only possible basis on which the tribunals could proceed. It is also equitable and sensible from the point of view of manpower policy. The employer does not have a job which is suitable for the employee and it is right, therefore, that he should release him for the benefit of others who have.

Mr. Kenneth Lewis: The Parliamentary Secretary has given the example of a fitter. He knows perfectly well that there are fitters who are used to doing work of a particular type. In the case he cited the firm might have run out of that type of work and could not offer the employee the same type of work on which he had been engaged for perhaps a number of years. It would be pointless the firm offering work of a different type, perhaps work being done by other fitters, because the union would not wear it, so to speak. In such circumstances, where the employer might offer employment of a different kind to a fitter, surely that is where the tribunal should have a certain amount of elasticity and discretion in making its decision.

Mr. Thornton: The tribunal would have that discretion. If an alternative type of work was offered to a fitter and if the tribunal thought that it was suitable, although the fitter had refused the job, it would be for the tribunal to determine whether or not that refusal was reasonable. If it was unreasonable, then the worker would lose his claim. I submit that the Amendment would completely undermine this position and greatly damage the scheme. I certainly could not recommend its acceptance. Indeed, I must ask the House to reject it.

Mr. Ronald Bell: The Parliamentary Secretary's answer was most disappointing, although not surprising, because we debated this matter in Committee and got the same sort of answer. We felt strongly enough about it to table the Amendment again so that the issue could be debated at this stage.
We must make progress, so I will be brief in going over some of the arguments again. I must repeat them because we wish to leave this matter clearly in the mind of the Parliamentary Secretary. He must remember how this situation arises. We are dealing with Clause 2. If a man who is dismissed is offered the same job again, this does not arise. It arises where he is offered not the identical job but a job which is slightly different. That will happen in a great many cases.
We pointed out in Committee that subsection (3) is so tightly drafted that it excludes every new offer of employment which is even minimally different. Therefore, almost every offer of employment would come under subsection (4), and under that subsection there is provision that the offer may take effect as much as four weeks after the date of termination of the previous employment.
The Parliamentary Secretary is giving a wrong significance to the fact that the employee may change his position during the four weeks. The hon. Gentleman referred in Committee to the employee's family circumstances changing. Let us look at the position as the Bill is now drafted. The man's employment comes to an end. Then the employer, suddenly finding that he has suitable work available, offers renewed employment to the dismissed employee. That renewed employment is to begin within four


weeks, and so comes within subsection (4). The employee refuses the offer, and the matter has to go to the tribunal. The only matter that the tribunal can consider is whether that offer was suitable to the employee. It cannot consider the general circumstances.
It is perfectly possible that the offer would have been entirely suitable to the employee. It could be virtually the same job again—with a change, however slight, so as to take it out of subsection (3), but, to all intents and purposes, the same job again. Is that man to be entitled to say, "No, the job is no longer suitable to me, because I have now made arrangements to live in Newcastle" or something of that sort? In other words, is he to be at liberty to alter his circumstances, or have them altered by some external means, so that, in effect, he is at liberty to refuse the same job again within four weeks?
As I pointed out in Committee, these cases will not be rare but frequent, because almost all the offers of renewed employment will come under subsection (4) as a result of what I consider to be the Government's most unwise rejection of our Amendment to loosen subsection (3). Had the Government accepted the addition of the word "material" in the subsection—

Mr. Deputy-Speaker: Order. With all respect, the hon. Gentleman cannot go back to that point now.

Mr. Bell: I was not going back, Mr. Deputy-Speaker, but the whole importance of this Amendment lies in the wide range of cases that will be covered as a result of the continued rigidity of subsection (3).

Mr. Thornton: We debated this point end and side, up and down, in Committee, I do not think that we should go over it again. At the same time, I cannot let the hon. Gentleman get away with it as he seeks to do. Instead of two clearly defined positions, he aims at creating three—

Mr. Deputy-Speaker: Order. It looks as though both Front Bench spokesmen are going back to what I asked them not to do, and that is to debate a stage of the Bill that has already passed. We must now debate only whether the word

"reasonable" is a word that we should add.

Mr. Bell: I respectfully agree, Mr. Deputy-Speaker. I was not transgresing there, but I must agree that the Parliamentary Secretary was. The only point I wish to make is that Clause 3 is still in that exclusive form which means that virtually all cases of re-offered employment come under subsection (4), to which the Amendment relates. That is the point.
10.30 p.m.
As paragraph (a) of subsection (4) is drafted the tribunal can consider nothing but the suitability to the employee. We welcome, of course, the Amendment we have just passed striking out the words in lines 15 and 16, but the value of that is lost unless it is a paving Amendment to such an Amendment as that which my hon. Friend the Member for Kidderminster (Sir T. Brinton) has moved. If the Parliamentary Secretary looks at lines 15 and 16 as we have amended them he will see that no widening occurs. The Amendment we have agreed to could be a useful one if it were supplemented by this one.
I see the point made by the hon. Member that the suitability for the employee should weigh more than the suitability to the employer. I accept that, but it should not be excluded altogether and the tribunal should not be debarred, as it explicitly and unquestionably would be, from considering anything but the suitability for the employee. It may be that the Parliamentary Secretary thinks that this Amendment puts the employer and the employee on the same terms by leaving out any words which give emphasis to the position of the employee. Our purpose is to widen the discretion of the tribunal and not in any way to displace the emphasis in favour of the employee.
Could the Parliamentary Secretary say that he and his right hon. Friend were willing to direct their minds to this matter again? The Bill must go to another place and any hope that the Parliamentary Secretary cherishes that it will come from there wholly unamended to avoid a subsequent stage is, I am sure illusory. We have had about 200 Amendments and I do not suppose that we have achieved perfection yet. There are bound to be


some little points which have been forgotten and no doubt there will be Government Amendments in another place.
I therefore beg the hon. Gentleman to say that he will look at this again and see whether a form of words can be found to open the discretion of the

tribunal while still leaving the emphasis on the suitability for the employee. On that understanding, I think my hon. Friend the Member for Kidderminster would be willing to withdraw the Amendment because it would meet the object which we have in mind.

Amendment negatived.

Amendment made: In page 3, line 23, leave out subsection (5).—[Mr. Thornton.]

Orders of the Day — Clause 3.—(DISMISSAL BY EMPLOYER.)

Mr. Thornton: I beg to move Amendment No. 16, in Clause 3, in page 3, line 41, to leave out "by summary dismissal" and to insert "without notice".
This small Amendment is necessary to ensure that the definition of the Clause is wide enough to cover the various types of termination of employment which we want to cover and which, I think that the House will agree, we ought to cover. I am advised that "summary dismissal" is too narrow an expression for this purpose. It could be taken to imply that dismissal was both intentional and lawful, but we want also to cover cases of wrongful dismissal by the employer and cases where the contract is terminated not intentionally by the employer but by operation of the law. The latter is the sort of case dealt with in the new Clause—"Implied or constructive termination of contract". The Amendment would prevent any doubt as to whether such a case could come within the scope of the Bill.

Amendment agreed to.

Orders of the Day — Clause 5.—(LAY-OFF AND SHORT-TIME.)

Mr. Thornton: I beg to move Amendment No. 18, Clause 5, in page 6, line 23, to leave out from "Where" to "remuneration" in line 28 and to insert:
by reason of a diminution in the work provided for an employee by his employer (being work of a kind which under his contract the employee is employed to do) the employee's".
The Amendment deals with a point raised in Committee by the hon. Member for Buckinghamshire, South (Mr. Ronald Bell). The purpose of Clause 5(2) is to define what we mean by "short-time". It is defined as occurring when an employee's remuneration for any week is less than half a week's pay.
As drafted, the subsection relates to employees whose pay depends directly or indirectly on the number of hours for which they work, but it was pointed out in Committee that the pure piece-worker

might be held to be excluded by this description because the pay of such a worker would be only indirectly related to the number of hours for which he worked. Because the Clause now defines short-time in terms of a drop of earnings, we no longer need any reference to hours in the preamble to subsection (2). Instead the Amendment says that when as a result of a reduction in work the employee's pay falls to less than half a week's pay, he will be on short-time. The expression "reduction in work" is brought in to cover time work and piece work alike.
We are grateful to the hon. Gentleman for drawing our attention to this matter and I hope that he will accept the Amendment.

Mr. Ronald Bell: I rise only to thank the hon. Gentleman for meeting this point.

Amendment agreed to.

Orders of the Day — Clause 6.—(RIGHT TO REDUNDANCY PAYMENT BY REASON OF LAY-OFF OR SHORT-TIME.)

Amendment made: In page 6, line 37, leave out Clause 6.—[Mr. Thornton.]

Orders of the Day — Clause 7.—(RESTRICTIONS ON RIGHT UNDER S. 6.)

Amendment made: In page 7, line 38, leave out Clause 7.—[Mr. Thornton.]

Orders of the Day — Clause 8.—(CONTINUOUS EMPLOYMENT FOR REQUISITE PERIOD.)

Amendment made: In page 9, line 10, at end insert:
(4) The preceding provisions of this section shall have effect subject to sections (Employment wholly or partly abroad) and (Modification of right to redundancy payment where previous redundancy payment has been paid) of this Act in cases to which those sections apply respectively.—[Mr. Thornton.]

Orders of the Day — Clause 9.—(REFERENCE OF QUESTIONS TO TRIBUNAL.)

Amendments made: In page 9, line 21, leave out from beginning to "shall" in line 23.

In page 9, line 24, leave out from "dismissed" to "by" in line 25.

In page 9, line 25, at end insert:
(3) In relation to lay-off or short-time, the questions which may be referred to and determined by a tribunal, as mentioned in subsection (1) of this section, shall include any


question whether an employee will become entitled to a redundancy payment if he is not dismissed by his employer and he terminates his contract of employment as mentioned in subsection (3)(a) of section (Right to redundancy payment by reason of lay-off or short-time) of this Act; and any such question shall for the purposes of this Part of this Act be taken to be a question as to the right of the employee to a redundancy payment.—[Mr. Thornton.]

Orders of the Day — Clause 10.—(SPECIAL PROVISIONS AS TO TERMINATION OF CONTRACT WITHOUT NOTICE OR WITH SHORT NOTICE.)

Mr. Thornton: I beg to move Amendment No. 27, Clause 10, in page 9, line 26, to leave out from "any" to "takes" in line 31 and to insert:
such time as is mentioned in the next following subsection, an employee who—

(a) has been given notice by his employer to terminate his contract of employment, or
(b) has given notice to his employer under subsection (1) of section (Right to redundancy payment by reason of lay-off or short-time) of this Act".

Mr. Deputy-Speaker, I think that it would be for the convenience of the House if we were to consider at the same time Government Amendments Nos. 28 and 29.

Mr. Deputy-Speaker (Dr. Horace King): If the House so pleases.

Mr. Thornton: These Amendments are intended to put right an inconsistency in the Bill. Clause 10 protects the rights of a worker who, after he has been given notice by his employer, is, during the period of that notice, dismissed either for going on strike or for misconduct. The Clause provides that, in these eventualities, the worker may appeal to the tribunal, which may award him the whole or part of the redundancy payment otherwise due, or no payment at all. The difficulty is that, as the Clause stands, the provisions apply at any time after the worker has been given notice, including not only the notice he is entitled to under his contract but any additional period of notice which the employer may give ex gratia. If, for instance, the worker was entitled under his contract to four weeks' notice but his employer chose ex gratia to give him 12 weeks' notice, the provisions would apply throughout the 12-week period.
This contrasts with the position under Clause 4, which protects the rights of the worker who has been given notice by his employer but leaves, say, to get another job before that notice has expired. In this case, the Clause is specifically applied only to the obligatory period of notice, which is defined in Clause 4(5) and means, in effect, the period of notice which the employer is required to give under the contract.
Returning to the example I have given of an employer who gives 12 weeks' notice, of which eight weeks is ex gratia, we now have a discrepancy which it seems obviously right to eliminate. The worker who left to get another job during the first eight weeks of the notice period could have no right to a redundancy payment because Clause 4 would not apply during the ex gratia period; but the worker dismissed for misconduct or for going on strike during those eight weeks would have his rights protected under Clause 10.
Clearly, the answer is that the provisions of Clause 10 should apply only during the obligatory period of notice as defined in Clause 4(5), and this is what the Amendments would secure.

Amendment agreed to.

Further Amendments made: In page 9, line 35, leave out from "in" to end of line.

In page 9, line 37, at end insert:
(2) The times referred to in the preceding subsection are—

(a) in a case falling within paragraph (a) of that subsection, any time within the obligatory period of the employer's notice (as defined by section 4(5) of this Act), and
(b) in a case falling within paragraph (b) of the preceding subsection, any time after the service of the notice mentioned in that paragraph.

In page 9, line 38, after "the" insert "last".

In page 9, line 42, leave out from "in" to "the" in line 43.—[Mr. Thornton.]

Orders of the Day — Clause 11.—(EXEMPTION ORDERS.)

10.45 p.m.

Mr. Thornton: I beg to move Amendment No. 31, Clause 11, in page 10, line 42, at end insert:
whether in pursuance of an application made by all or any of the parties to the agreement in question or without any such application".


This Amendment is intended to remove a possible ambiguity in subsection (4) as to the circumstances in which the Minister may revoke an exemption order under Clause 11. We have always intended that the Minister should be left free to revoke an exemption order without having to wait for an application from all or any of the parties concerned. I am advised that the present wording of subsection (4) may not be free from ambiguity on this point, and this Amendment makes the position clear.
I think it is desirable that the Minister should have full discretion in this matter. The agreement on the basis of which the original exemption order was made may well have been modified with the passage of time and some of the parties to it may have withdrawn. Circumstances may well have arisen where it would no longer be reasonable to maintain the exemption order in force, and I think the Minister should be given discretion to revoke the order without having to wait for an application from the parties. Normally, no doubt the Minister would not revoke an order unless this was the wish of the parties, but I think we must make it clear that he can, if necessary, look at an agreement as it has evolved since the order was made and decide, if he sees fit, that it is no longer reasonable for the order to continue.

Amendment agreed to.

Orders of the Day — Clause 13.—(CHANGE OF OWNERSHIP OF BUSINESS.)

Mr. Thornton: I beg to move Amendment No. 32, Clause 13, in page 12, line 26, leave out "person" and insert "persons".
The Amendment corrects a mistake which originally occurred when this Clause was tabled in Committee. The word "persons" in the plural was what was intended, and this is what the sense of the paragraph clearly required.

Amendment agreed to.

Orders of the Day — Clause 14.—(EXCLUSION OR REDUCTION OF REDUNDANCY PAYMENT ON ACCOUNT OF PENSION RIGHTS.)

Mr. Thornton: I beg to move Amendment No. 33, Clause 14, in page 12, line 39 leave out:
to which this section applies".

I suggest that it would be for the convenience of the House to take Amendments Nos. 33, 34 and 35 together.

Mr. Deputy-Speaker: I have no objection, if the House has no objection.

Mr. Thornton: These are minor Amendments which will remove a possible ambiguity in the wording of the Clause.
It has always been our intention in the regulations which will be made under the Clause to allow employers to offset against a redundancy payment only occupational pensions which become payable on or shortly after redundancy. The Amendments relate to the situation where a pension is payable shortly after redundancy—for example, where a man becomes redundant at age 59½ and his pension will start to be paid six months later when he is 60. As the Bill stands, the last few lines of Clause 14(1) read:
which is to be paid at, or at a time determined by reference to, the time when he ceases to be employed by an employer".
I am advised that that wording will not necessarily make it clear that the time within which a pension must be paid in order to count for offset will be whatever time is laid down in the regulations. There is a possibility that it could be held to mean that the time limit should be laid down in the pension scheme itself. Of course, pensions schemes do not lay down that pensions must be payable within a given time after the employee leaves the employment. They relate them to the time of retirement or to the attainment of a specified age. We want to remove this ambiguity. The Amendment will make it clear that to count for offset a pension must be paid within such time after redundancy as prescribed by the regulations.

Amendment agreed to.

Further Amendments made: In page 12, line 41, leave out "(2) This section applies to" and insert "being".

In page 13, line 2, leave out from "paid" to end of line 4 and insert:
by reference to his employment by a particular employer and is to be paid, or to begin to be paid, at the time when he leaves that employment or within such period thereafter as may be prescribed by the regulations".—[Mr. Thornton.]

Mr. Thornton: I beg to move Amendment No. 36, Clause 14, in page 13, line 12, at the end to insert:
(4) In relation to any case where, under any provision contained in this Part of this Act, a tribunal determines that an employer is liable to pay part (but not the whole) of a redundancy payment, any reference in this section to a redundancy payment, or to the amount of a redundancy payment, shall be construed as a reference to that part of the redundancy payment, or to the amount of that part, as the case may be.
It will be convenient to the House to take at the same time Amendments Nos. 92 and 96.

Mr. Deputy-Speaker: May I again protest on behalf of the Chair? It is a great help to the Chair—I say this to the Parliamentary Secretary and, through him, to other hon. Members on the Front Bench—if the Chair knows in advance which Amendments are to be taken together. The duty of the Chair is to protect the interests of hon. Members who may be badly affected by a grouping of Amendments. This is a general criticism and not a personal criticism of the hon. Gentleman.

Mr. Thornton: These three Amendments all deal with a situation in which a redundancy payment may be reduced in accordance with regulations to be made under Clause 14 because the worker concerned is also receiving a pension or superannuation payment. They are all purely technical in nature.
The Amendment to Schedule 1 simply states explicitly that the various calculations to be made under the Schedule in order to determine the amount of a redundancy payment shall not prejudice the operation of regulations under Clause 14 relating to pensions. It makes it clear that while the amount of the redundancy payment in any particular case must be worked out in accordance with the rules in the Schedules, once the amount has been worked out it may still be subject to reduction by virtue of regulations under Clause 14. This simply makes quite clear what has always been the Government's intention.
The Amendments to Clause 14 and Schedule 4 are concerned with the operation of regulations about pensions under Clause 14 in cases in which a tribunal has awarded a worker part of a payment which would otherwise have been due to

him. There are a few places in the Bill where tribunals are given this power and it is necessary to be clear how the pension regulations would operate in these cases.
The Amendment to Clause 14 makes it clear that if a tribunal awards only part of a payment any reduction which may be made under regulation on account of the pension is to apply to the amount of the part award just as it would have applied to the whole pension. The Amendment to Schedule 4 relates to the calculation of rebate to an employer in a case in which the redundancy payment has been reduced because of the pension. The Amendment ensures that the paragraph covers the case in which there is both a part award by a tribunal and a reduction on account of the pension.

Amendment agreed to.

Orders of the Day — Clause 15.—(CONTRACTS OF EMPLOYMENT FOR A FIXED TERM.)

Mr. Thornton: I beg to move Amendment No. 37, Clause 15, in page 13, line 16, after "before" to insert:
the appointed day (whether before or after".
This is a small technical Amendment substituting the appointed day for the date when the Act is passed. Perhaps I need offer no further explanation.

Amendment agreed to.

Orders of the Day — Clause 16.—(EXCLUDED CLASSES OF EMPLOYEES.)

Lieut.-Colonel Sir Walter Bromley-Davenport: I beg to move Amendment No. 38, Clause 16, in page 14, line 5, at the end to insert:
(3) Section 1 of this Act shall not apply to any person in respect of his employment as a theatrical artiste provided that his contract of employment is one that has been agreed by the appropriate organisations of employers and trade unions concerned with theatrical employment.
Although I shall take only a few minutes in commending the Amendment I want to emphasise that there are certain points which I shall raise which are causing the greatest anxiety in the theatrical profession. If this Redundancy Payments Bill is intended to cover employment of such people as professional actors and actresses, I suggest that it is an unsuitable arrangement for such employment, and that some words should be added to this exemption


Clause, Clause 16, and elsewhere, to take them outside its scope. Whether the phrase wording of my Amendment will commend itself to the Minister I do not know, but in any event, if he approves the principle of it, the necessary steps can be taken by him to amend the Bill before it reaches the Statute Book. It may, for instance, be necessary to make some consequential Amendments in later Clauses which oblige employers to contribute to the Redundancy Fund, and so forth.
During the Second Reading debate on 26th April the Minister referred to the problems which might arise in certain types of employment where the employment was of a casual nature, such as shipbuilding, and he suggested that a possible answer to that was for the employers and the employees to work out an alternative scheme and to apply to him for exemption under Clause 11. It does not seem to me, however, that this would necessarily provide the right answer so far as the theatre world is concerned.
Basically, it seems wrong that when a theatrical artiste is fortunate enough to be a member of a company which enjoys a long run for two or three years or more he should get a large redundancy payment from the producing manager at the end of the run when other people in the theatrical profession who have performed in a play which has unfortunately come off after a few nights or a few weeks through loss of public support will get no benefit at all from the scheme.
If there are to be redundancy payments in the theatrical world at all there might well be more merit in making them available when a play collapses after a few nights rather than if it runs prosperously for several years. But the basic fact to remember is that no producer is in a position to remunerate his aristes at all, let alone pay them redundancy payments, if the public cannot be attracted to the theatre concerned.
I do not wish to say any more at this stage, but I hope that the Minister will be able either to explain why this Bill is appropriate for employees in the theatrical profession or, if not, what he proposes to do about it. As the Minister knows there are already long-standing

and elaborate arrangements in the theatre for arranging standard contracts between employers and employees. These are settled in the first place by the trade unions and employers' associations concerned, and the seal of approval is then given to them by the London and Provincial Theatre Councils, whichever may be concerned. My Amendment suggests that so long as these approved contracts exist there is no need for any special application of redundancy payments by a Bill of this kind.

11.0 p.m.

Mr. Thornton: I listened with interest to the arguments advanced by the hon. and gallant Member for Knutsford (Sir W. Bromley-Davenport), and I think we would all concede that there are a number of special features about employment in this profession. There is a wide variety of practice. Some people in the profession are on fixed-term contracts of long enough duration to come under Clause 14, which means that they can be contracted out of rights to redundancy payments on the expiry of their contract if the parties so agree. Some are on shorter fixed-term contracts, and others are on contracts of indefinite term. Some are in more or less permanent employment, where it may be that the provisions of the Bill would be entirely appropriate. Others are engaged only for as long as a particular play or show runs. Then there is the question of where one draws the boundaries of theatrical employment, and how to treat related industries, such as the film industry and the musical world.
I do not think that it would be right to resolve the situation here and now by accepting the Amendment and excluding theatrical artistes completely from rights under the Bill. We are not in a position now to say that that is the right answer. It is surely up to the two sides of the industry to consider their position and how they will be affected by the provisions of the Bill. It may be right that the Bill should apply, without modification at any rate, to some parts of the profession. We should not pre-judge the issue at this stage.
If it appears to those immediately concerned that the statutory provisions do not fit the case in all respects, it will be open to the two sides to negotiate an


alternative scheme for payment on the termination of employment and to seek an exemption order under Clause 11 on the basis of such an agreement. That is the purpose of Clause 11, to provide some flexibility to meet special circumstances.
If, on examination by the employers and employees concerned it should prove that some modification of the statutory provisions is desirable, an exempted scheme under Clause 11 should be the first possibility to be considered.

Sir Harmar Nicholls: Has the hon. Gentleman had discussions with either side of the theatrical profession? This profession's anomalous position should have been anticipated, and it would help very much if the hon. Gentleman could tell us that he has had discussions with the theatrical profession.

Mr. Thornton: I cannot say that I have discussed this with the profession, but it is something that we might perhaps call to its attention, and my right hon. Friend's Department and my Department will certainly give any help and advice that they can.
As I said, if on examination by the employers and employees concerned it should prove that some modification of the statutory provisions is desirable, then an exempted scheme under Clause 11 should be the first possibility to be considered. There is also, however, the Minister's power under Clause 16(5) to exclude particular classes of employment from the provisions of Part I of the Bill, or to apply the provisions with appropriate modifications. This will enable us to do by Order, which would be subject to the affirmative Resolution, what the Amendment seeks to do if, in the light of consultations with those affected, that appeared to be the right course.
All this calls for careful consideration by the employers in the profession. The provisions of the Bill are sufficiently flexible to accommodate whatever solution may be arrived at. We should not prejudge the issue at this point, before those concerned have had a chance to form their views. I hope that the hon. and gallant Gentleman will consent to withdraw the Amendment in the light of my explanation. If not, I must advise the House to reject the Amendment.

Mr. Godber: I am sorry that the Parliamentary Secretary feels that he cannot go along with the proposals of my hon. and gallant Friend. I thought that he made a convincing speech in respect of a profession which he has clearly studied closely. He made a strong case. It is true that there are possibilities in regard to Clause 11, but whether it would be feasible to invoke that Clause is something we should have to consider carefully. There are also certain possibilities in regard to Clause 15 and fixed-term contracts, whereby it is possible to contract out of some provisions, although it would not be possible to contract out of the weekly payments.
That is one aspect of the matter which my hon. and gallant Friend might care to look at, because the real problem of this profession—and it probably applies to others—is that the provisions of the Bill, with which we have great sympathy, cannot be made to fit in. My hon. and gallant Friend having made a convincing speech, I hope that the Parliamentary Secretary will agree to study the matter further and perhaps be more sympathetic at a later stage.

Sir Harmar Nicholls: I took a different view of the Parliamentary Secretary's speech from that taken by my hon. Friend. I know that he has to use the words which will satisfy his Department at this stage, so that it can keep the matter tidy in its own filing cabinets, but reading behind those words I thought that the Parliamentary Secretary was agreeing with my hon. annd gallant Friend. Before he asks leave to withdraw the Amendment, therefore, I hope that we may have confirmation that the hon. Gentleman was agreeing with my hon. and gallant Friend. I took the words of the Parliamentary Secretary to mean that he accepted entirely that in the case of the theatrical profession there were grounds for looking at the matter separately. I thought that he was really saying that between now and when the Measure comes back from another place he will find words to give effect to what my hon. and gallant Friend is asking for.
I do not think that my hon. and gallant Friend will insist on his form of words—they are merely the hook on which to hang his formidable case—but I should like some confirmation that the principle


behind those words is accepted by the Financial Secretary and that he will do something about the matter.

Mr. Godber: I hope that I have not wronged the Parliamentary Secretary. If my hon. Friend's interpretation is right nobody will be more happy than I.

Sir Harmar Nicholls: Behind all those words, read out so nicely by the Parliamentary Secretary, I thought he gave almost a promise that this was a separate and different case, and that something will be done about it. I hope that before the Amendment is withdrawn we shall have confirmation to that effect.

Mr. Thornton: To clear up any misunderstanding, may I say that I recognise that special problems and considerations are involved in relation to this very complex profession, but I certainly would not commit myself to any line of action on behalf of my right hon. Friend. We think that consideration should be given to the question by both sides of the industry, so that they can see what arrangements can be arrived at. Then, if they come to my right hon. Friend, he will certainly be prepared to do what he can to help.

Sir W. Bromley-Davenport: Will the hon. Gentleman have another look at it or not?

Mr. Thornton: I could not undertake that any special provision would be made unless my right hon. Friend received representations from both sides of the industry. If he did, and those representations were to the effect that there was a possibility of an agreed scheme which could qualify under the exemption Clause, my right hon. Friend would be prepared to look at that. It must be on the basis of agreement between both sides of the industry or profession.

Mr. A. R. Wise: I am afraid that the hon. Gentleman's undertaking at the moment is extraordinarily similar to that given by the First Secretary of State on a previous occasion in this House, when he said that the Government would gladly look at anything—[Interruption.]—I cannot see that it is better than that. I find the Parliamentary Secretary's explanation singularly inadequate. I recognise that it is very difficult for him to commit his right hon. Friend, but his right hon. Friend is entitled to commit

himself. I therefore suggest that someone sends for his right hon. Friend, so that he can give us an answer.

Sir W. Bromley-Davenport: As the hon. Gentleman will not look at it again, I am prepared to withdraw the Amendment, because I have no doubt that this Amendment will be considered in another place. I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. Thornton: I beg to move, Amendment No. 39, Clause 16, in page 14, line 9, to leave out from "any" to the end of line 11 and to insert:
person in respect of any employment which".
Subsection (4) of Clause 16 exempts from Clause 1 certain categories of employees who are not Crown servants but who are in employment analogous to that of Crown servants, for example, employees of public bodies like the Forestry Commission and certain National Health Service employees, like Executive Council staff. The purpose of the Amendment is to provide for people employed in this capacity part-time and who work elsewhere for the rest of their time. The present effect of the subsection is that such a person would be excluded from the effects of the Bill even if he became redundant from his other job, in respect of which, he would, in the normal way, have been entitled to a redundancy payment.
For example, a cleaner might spend part of her time cleaning the offices of a building of one of these public bodies, but most of it in cleaning the offices of a private firm. We do not want the mere fact that she was employed for a few hours a week in the first of these jobs to mean that she would be deprived of a redundancy payment if she became redundant from the second, the main source of her livelihood. I am sure that the House will agree that this is right.

Amendment agreed to.

Further Amendments made: In page 14, line 19, at end insert:
(5) Without prejudice to any exemption or immunity of the Crown, section 1 of this Act shall not apply to any person in respect of his employment in any capacity under the Government of an overseas territory.

In line 29 leave out "(4)"and insert "(5)".—[Mr. Thornton.]

Orders of the Day — Clause 17.—(WRITTEN PARTICULARS OF REDUNDANCY PAYMENT.)

Mr. Thornton: I beg to move, Amendment No. 42, Clause 17, in page 14, line 40, after "payment", to insert:
otherwise than in pursuance of a decision of a tribunal which specifies the amount of the payment to be made".
This is a simple tidying-up Amendment. Clause 17(1) requires the employer to give the employee a written statement indicating how the amount of the redundancy payment has been calculated. However, where a tribunal decides that an employee should receive a certain sum of money, it does not seem appropriate or necessary to supply the usual explanatory statement. The tribunal, rather than the employer, would have worked out the amount due, and the tribunal's decision would, of course, be communicated to the worker. The Amendment, therefore, relieves the employer of his obligation to supply a a statement in this case.

Amendment agreed to.

Orders of the Day — Clause 18.—(DEATH OF EMPLOYER.)

Amendment made: In page 15, line 17, leave out Clause 18.—[Mr. Thornton.]

Orders of the Day — Clause 19.—(DOMESTIC SERVANTS.)

11.15 p.m.

Mr. Thornton: I beg to move Amendment No. 44, Clause 19, in page 15, line 35, after "provisions" to insert:
(except section 13 of this Act)".
The effect of this Amendment is to disapply, as far as domestic servants are concerned, Clause 13, which defines the position as to entitlement to redundancy payment where a business changes hands. The underlying principle of Clause 13 is that a change of ownership of a business should not give rise to redundancy payments providing that the employee's job remains in being but that where the new employer simply buys the premises and conducts a different business in them the employee should be entitled to payment from the old employer even if the new employer is willing to offer him fresh employment.
We think that a change of householder where a domestic servant is employed should be regarded as a change in occupancy of the premises and not as a change in ownership of the business. If it were

treated as ownership of a business, the effect would be that the incoming householder, if he kept on the employee, would be taking over her accumulated right to redundancy payment and would be liable, if the employee subsequently became redundant, for a payment in respect of her service with the previous householder as well as with him.
We think that this would be unacceptable. The position, therefore, under the Amendment will be that domestic employees will be entitled to redundancy payment from the outgoing householder whether or not she is re-employed by any one taking the house over. I think that this is reasonable in view of the particularly close relationship between employer and employee in such employment and is fair to the householders concerned.

Amendment agreed to.

Orders of the Day — Clause 20.—(MARINERS OTHER THAN SHARE FISHERMEN.)

Amendment made: In page 16, line 1, leave out "2 (5)" and insert:

"(Employment wholly or partly abroad)".—[Mr. Thornton.]

Orders of the Day — Clause 22.—(INTERPRETATION OF PART I, AND SUPPLEMENTARY PROVISIONS.)

Amendment made: In page 16, line 33, at end insert:
(3) In this Part of this Act "cease" means cease either permanently or temporarily and from whatsoever cause, and "diminish" has a corresponding meaning.—[Mr. Thornton.]

Orders of the Day — Clause 24.—(CONTRIBUTIONS TO FUND.)

Mr. Thornton: I beg to move Amendment No. 48, Clause 24, in page 17, line 34, to leave out "fourpence" and to insert "fivepence".
The effect of the Amendment is to increase the cost of the surcharge for men by 1d. In other words, the National Insurancee stamp for men, instead of costing 4d. more than at present, will cost 5d. more. The need for this increase arises from the decision of the Standing Committee to increase the amount of rebate that the employers will be entitled to reclaim from the fund from some 60 per cent. on an average of redundancy payments to something over 70 per cent. This has to be paid for and the increase in the surcharge for men


achieves it. The increased level of the rebate means an increase of outgoings from the fund of between £2 million and £3 million per annum and the addition of 1d. on the men's stamp will yield about £3 million. I ask the House to agree that, having willed the end, we must now will the means.

Mr. Godber: I was somewhat surprised at the last comment of the Parliamentary Secretary, when he referred to willing the means, our having willed the end. That was not very appropriate here.
We are in a slight difficulty because my hon. Friends and I willingly acknowledge that the Government went a substantial way towards meeting us in regard to what we believe to be one of the main issues of the Bill; namely, the degree of funding. The Government took note of the proposals which we put to them and they brought forward an Amendment in Committee which provided for a substantial increase in funding. This, we acknowledge, has improved the Bill and helps to safeguard many small employers, with whom we were concerned, by spreading the burden more evenly, not only safeguarding them but also people in the contracting industries. This is, of course, a thoroughly sound thing for the Government to have done.
However, we now take issue with the Government on the question of the payment. The problem is that any estimate—and the Parliamentary Secretary used the word "estimate"—must be based on a great many assumptions. I am sure that the Parliamentary Secretary accepts that. Indeed, his right hon. Friend made it abundantly clear on Second Reading, when he said:
None of these factors can be forecast with any precision. We have had to take into account a range of possibilities, using the best information available to my Department. In the light of this, we have proposed a level of surcharge which should, we think, ensure that the Redundancy Fund is self-financing over a substantial period".—[OFFICIAL REPORT, 26th April, 1965; Vol. 710, c. 44.]
The truth is that it is not only an estimate but is largely guesswork. In our view this has been fully ensured, if not over-ensured.
We should remember that there is provision in the Bill to enable the Minister

to make Amendments later, up or down. We believe that the former sum, 4d., would have been adequate and that it is a pity to increase it now. Therefore, while we welcome the reasons which have led the Government to propose the increase—that is, the increase in funding—we believe they could have achieved this without making the increase as proposed in the Amendment. After all, if we had been proved wrong the amount could have been increased later, say in 12 months' time. We feel that there will be less keenness to reduce the amount. As I say, the Treasury could have catered for the amount had we been proved wrong, and the amount could have been increased in 12 months' time. It would indeed have been more sensible to have left the figure as it was before.

Amendment agreed to.

Orders of the Day — Clause 25.—(COLLECTION OF REDUNDANCY FUND CONTRIBUTIONS.)

Mr. Thornton: I beg to move, Amendment No. 49, Clause 25, in page 19, line 10, to leave out from "Acts" to the second "to".
This is a small, technical Amendment. The general purpose of the Clause is to apply the rules and procedures established in the National Insurance Acts for the collection of National Insurance contributions and the collection of Redundancy Fund contributions by treating the two contributions as one combined contribution.
Subsection (5), to which the Amendment relates, ensures that references in any other Act to National Insurance contributions shall also apply to Redundancy Fund contributions. There are, however, two exceptions: the National Insurance Acts, which have been dealt with earlier in the Clause, and the enactments relating to Income Tax. There is only one such enactment relating to Income Tax—Section 377(2) of the Income Tax Act, 1952. That is being repealed by the current Finance Bill and we therefore no longer need the words we propose to delete.

Mr. Ronald Bell: I understand that the necessary provision is being made in the present Finance Bill, and that the redundancy payments will be free of Income Tax in the hands of the recipients.

Mr. Thornton: That is so, but that will be provided for in the next Finance Bill.

Mr. Bell: Does the hon. Gentleman mean that it is not provided for in the current Finance Bill but that the intention is to provide for it in the 1966 Finance Bill, and that, therefore, when this Measure becames an Act and comes into operation, as I understand is envisaged, at the end of the year, the initial payments will be subject to Income Tax until the 1966 Finance Bill is enacted? Surely, that cannot be the position.

Mr. Thornton: I am sorry that I cannot find the document, but I believe that this point was dealt with by my right hon. Friend the Chancellor of the Exchequer in reply to a Parliamentary Question about a week ago. That was in relation to the provisions of the Finance Bill covering the question of Income Tax relief in respect of redundancy payments.

Mr. Bell: Let us just be clear that this provision is in the current Finance Bill, and that, as a result, payments made when this Measure comes into operation will be exempt from Income Tax. The effect of the Government's Amendment is to strike out reference in this Clause to the Income Tax Acts. We have no objection to that, of course, provided that the matter is covered by the present Finance Bill, and is not being left to the Finance Bill of 1966.

Mr. Thornton: It is not covered by the present Finance Bill. In the Parliamentary Answer to which I have referred, my right hon. Friend said that it would be in the next Finance Bill, and would apply retrospectively, and that, in the meantime, Income Tax would not be payable on redundancy payments.

Mr. Godber: This rather disturbs us. We had not realised the position. I believed that we had received an assurance in Committee about this matter. It is extraordinary incompetence on the part of the Government if the point has not been covered. They had warning in Committee, and there was time for the Treasury to deal with it. I do not blame the Parliamentary Secretary, but it certainly was for the Government to see that it was dealt with. It is extraordinary that it should be left in this muddled way; that recipients will be liable for

this tax payment but that in some underhand way they will not be asked to pay it, and there will be retrospective legislation. That is not the way to treat this House. It is entirely wrong. I protest against the way in which it has been done. It is a most unsatisfactory state of affairs.

Mr. Thornton: I have now found the document. On 14th July, my right hon. Friend the Chancellor of the Exchequer, in answer to a Written Question, said:
In my Budget Speech I made it clear that my proposal to legislate on this point in the Finance Bill was dependent on the progress of the Redundancy Payments Bill. I have now decided that exempting legislation should be introduced next year. When the Redundancy Payments Bill becomes law I will make a further statement about the proposed exemption, so that employers can take account of it when making payments to which it will apply; it will be framed so as to cover all qualifying payments made after the provisions of the Redundancy Payments Bill come into force."—[OFFICIAL REPORT, 14th July, 1965; Vol. 716, c. 81.]

11.30 p.m.

Mr. Godber: I am grateful to the Parliamentary Secretary for having explained the point, but that does not excuse the way in which the Government have handled this matter. They have had plenty of time to deal with it. I do not understand why it should have been dealt with in this way and I make my protest about the way in which it has been done.

Sir Harmar Nicholls: The whole House should support the protest. Although the Parliamentary Secretary says that the payment will not have to be made, the demand will have to go out. The Inland Revenue officers will have to do their duty. There is the stupid position that demands will have to be issued for payments which they will never see. Collection of taxes is a hard enough business in any case and this is bringing it into contempt. The terms of this Bill were known long before we had the present Finance Bill before us. I support the protest and hope that heed will be paid to it.

Mr. Ronald Bell: By leave of the House I speak again and I apologise for speaking so often. The Amendment seeks to leave out reference to Income Tax Acts. If the hon. Gentleman withdrew the Amendment, would the effect be to leave the exemption from the


Income Tax Acts and thereby cover the payments for the current year? If so, this would be a sensible way of meeting the point and under the Finance Bill in 1966 the Chancellor of the day could deal with the matter by including a provision exactly to the same effect as the Amendment we are considering.
It is a little difficult to see why deliberately at this point a gap should be left to be covered by an administrative assurance. Why not leave the reference to Income Tax Acts in the Bill? What is the nature of the operation we are being asked to take part in at the moment?

Sir Edward Brown: I want to take the argument a little further. I thought that the Parliamentary Secretary said that the employer would not deduct tax and the man concerned would receive the whole sum. Surely that is incorrect. The Income Tax collector must do his job. He must send in the demand and get the money. Surely a misstatement has been made. I hope that the Parliamentary Secretary will clear the matter up, because otherwise it will cause confusion.

Mr. David Mitchell: Am I right in thinking that no Chancellor of the Exchequer is in a position to commit his successor?

Mr. Thornton: I have full confidence in the Chancellor of the Exchequer being able to cope adequately with the situation. This Amendment does not relate to tax relief for redundancy payments. Section 377 of the Income Tax Act, 1952, allowed tax relief on the National Insurance element but not on the National Health or industrial injuries element of contributions paid by employers. We are advised that it is in order to anticipate the repeal of this provision in the Bill in this way.

Mr. Hale: My hon. Friend is perfectly right in saying that he has every confidence in the Chancellor of the Exchequer. So have I, but this is the High Court of Parliament and the Chancellor of the Exchequer is not the High Court of Parliament and he has no right to promise legislation. The most that he can do is to promise to present certain proposals to this House for consideration.
I have at this moment on my desk a demand for £300 Income Tax. Her Majesty's Government have not thanked me for services rendered to a Royal Commission, but Her Majesty's agent has suggested that I had been spending too much of my time away from my office and the income earned while I was away from the office should be regarded as unearned income. I have not paid that 300 quid. I fancy that I am under a moral obligation to pay it, but at the moment the spirit has not moved me and I have not even taken the advice of my psychiatrist about this. The matter rests there.
I have suggested that if the tax authorities would be kind enough to try to enforce payment by means of committal, it would give me an opportunity to make a personal investigation of the problems of penal reform, as I have wanted to do for a considerable time, leaving the responsibility for any diminution in the Government's present majority to be dealt with by those persons on whose shoulders that burden has been very properly imposed.
I do not think that we can dismiss this question of future Income Tax liability as lightly as that. I will vote for the hon. Gentleman if the Amendment is pressed to a Division, but I do not think that it will be. This may have been a problem which had gone so far that it could not be dealt with, but we should not just be told we can rely on the Chancellor of the Exchequer to do this, that and the other.
We must face the fact that although the Budget was carried through by the Chancellor with very great ability, the Finance Bill was subjected to a few minor alterations in the course of its passage, which indicated that not even the Chancellor could anticipate its final form. While I was begging for time to discuss the urgent problems of byssinosis which affect my constituents, the Chancellor was chucking £5 million or £6 million over the table every five minutes while the Finance Bill was going through its concluding stages, perhaps very properly and perhaps very desirably, but it meant that certain alterations were made in his proposals and that that is a possibility which should be envisaged when we are trying to deal with any


statement by any Chancellor of the Exchequer, however able and however honourable.

Mr. Peter Bessell: I have great sympathy with the Parliamentary Secretary who is obviously in great difficulty over a muddle which has been created for him, and I certainly do not want to add to his burdens tonight. However, I am still not clear about what is to happen.
Does the statement by the Chancellor of the Exchequer which the hon. Gentleman read a few moments ago mean that anyone in receipt of redundancy payment will not have Income Tax deducted and that the employer will not be liable to remit tax to the collector of taxes and that the collector of taxes will not make a demand for it?
If that is the case, I cannot see how that is to be done within the terms of the Income Tax Acts. On the other hand, if it is to be a question simply of holding the payments in abeyance in order that the Chancellor of the Exchequer may fulfil the undertaking in his statement, surely that, too, will provide problems in as much as the employee who will have received the full payment, or the employer who has paid it, will in law be required to meet the demand if a demand is made against him, if the Chancellor is unable to fulfil his pledge for any reason beyond his control. This matter should be made clear even if the Parliamentary Secretary cannot now help the House further than he has.

Mr. Howe: The situation into which the Government have got themselves is a regrettable example of lack of foresight and co-ordination, but I wonder whether it is not possible that, with that higher degree of foresight which one comes to expect from Chancellors of the Exchequer drawn from the party now on this side of the House, the matter has already been dealt with, albeit inadvertently.
I think that it was in the Finance Act, 1958, that it was provided that there should be exempt from Income Tax the first £5,000 of what were known as "golden handshake" payments. This means that the first £5,000 of payments by way of compensation for loss of office,

or damages in lieu of compensation, are in any event exempted, so that it may well be that the prescience of my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) has saved the Government, at least for the time being, although that does not excuse them for having failed to solve the problem for themselves.

Mr. Godber: With the leave of the House, may I add a few words? What my hon. and learned Friend the Member for Bebington (Mr. Howe) has just said is most interesting, and I hope very much that he is right. It would help to solve the problem for us. But it is clear that this is not the Government's view at present. They think that they have not provided for it. They have had opportunity to do so, and they should have provided for it. We on this side feel very strongly about what has suddenly emerged during the last few minutes, and we should have wished to divide the House on it. But I gathered from one of the last remarks of the Parliamentary Secretary that, in fact, this particular Amendment has nothing whatever to do with the point we are discussing, so that, presumably, the whole of this discussion is out of order, and we cannot press the matter.

Amendment agreed to.

Orders of the Day — Clause 27.—(REBATES TO EMPLOYERS IN RESPECT OF REDUNDANCY PAYMENTS AND EQUIVALENT PAYMENTS.)

Mr. Thornton: I beg to move Amendment No. 51, Clause 27, in page 21, line 23, to leave out from "made" to the end of line 25 and to insert:
at or before a time prescribed by the regulations".
I suggest, Mr. Speaker, that it would be for the convenience of the House if we took at the same time Government Amendments Nos. 52, 54, 55, 61 and 62, and also, if that would be in order, the Opposition Amendment No. 53, in page 21, line 26, to leave out paragraph (b). All these Amendments are related.

Mr. Speaker: As regards the Government Amendments, the Chair has no objection, if the House so pleases. But I think it essential, in that context, to discuss at the same time Amendment No. 53 in the name of the hon. Member


for Totnes (Mr. Mawby) and his hon. Friends. If that pleases the House, so be it.

Mr. Thornton: Clause 27(4), to which all these Amendments relate, except for the small consequential Amendments to subsection (6) and Clause 31, deals with the Minister's power to make regulations governing the making of claims by employers for rebates from the fund.
Paragraph (b) enables the Minister to require notice of intention to claim before the redundancies in question actually occur. The main change made by the Government Amendments is to insert a limit on the extent of advance notice which the regulations may require. This meets a point raised by some hon. Members opposite in Committee. The proposed new paragraph (b) provides that regulations may not require advance notice of claims more than four weeks before the date on which the contract of the worker concerned is terminated. This does not mean that it is our intention to require as much as four weeks' notice in all cases. As we indicated in Standing Committee, we propose to require less notice than this where relatively small numbers are involved. But the detailed provisions are best left to the regulations, if only because it may well prove desirable, in this new field, to modify them in the light of experience of administration of the scheme.
The four weeks limit applies only to claims relating to dismissals, though these will constitute the overwhelming majority of claims. The reason for this is that, where claims relate to payments in respect of lay-off or short time, the situation is much more complex and it would require some complicated provisions to define, in the various circumstances, the point in time from which any time limit on advance notice should run. Claims of this kind will, in our view, be comparatively rare, and I suggest that the requirements in these cases can best be dealt with in the regulations.
The rest of the Government Amendments deal with comparatively minor matters. Further study of the way in which we shall administer the scheme has satisfied us that it will be unnecessary to prescribed the precise form in which an employer must make his claim for a rebate. It will be enough if we can require

certain essential particulars. The power to prescribe forms is, therefore, deleted from subsection (4,a) and a power to prescribe particulars inserted in subsection (4,b). The Amendments also contain the small drafting change that we now speak of
prior notice that a claim may arise
where previously the wording was
notice of intention to make a claim".
We are advised that this looser wording is more appropriate since, at the time advance notice is required, it is possible in some cases that the employer's intention to claim would be contingent on some other event happening. For instance, if the claim related to a payment in respect of lay-off or short time, the employer's intention to claim might be contingent on the worker leaving his employment within the time limit laid down.
11.45 p.m.
I come now to Amendment No. 53, put down by hon. Members opposite. I cannot advise the House to accept it. It would remove altogether the Minister's power to require employers to give advance notice of claims for rebate. Some hon. Members opposite who served on the Standing Committee urged us to do this at the time, though it was not a matter on which they all spoke with one voice. Others recognised the need for some advance notice, but argued that we should put a limit on the notice we would require. On that, as I have explained, we have met them.
We are quite sure that we must require advance notice of claims. It is of great importance that an employer should be able to know before he makes his payment to the worker that he will get a rebate, and one of the objects of having advance notice is in order to give him this information. The Ministry of Labour will be using the time which elapses between the giving of advance notice of claims and the actual redundancy to carry out necessary checks and inquiries. Queries which arise will, so far as possible, be cleared with the employer before he is due to make the redundancy payment. We shall also be able to begin our efforts to find new work for the redundant workers that much earlier. We look upon this as a valuable result of the provision,


and I remind the House that advance notice of redundancy is already required in several countries of Western Europe, including France, Sweden and Western Germany. I must ask the House to reject Amendment No. 53.

Mr. Edward M. Taylor: I should like to say a few words in support of the Amendment which is in my name and those of three of my hon. Friends, which would remove paragraph (b) altogether.
I should explain that I was not a member of the Committee, although I have read its deliberations with some interest, and I have studied with as much care as I can the discussion on this matter. While saying that, I think it is also fair to comment that when I signed our Amendment, I was not aware of the Government's Amendment. It certainly removes some of the objections which seemed obvious even to me, a person who had not served on the Committee. It is a step forward, but, even tonight, I feel that there has been no possible argument put forward to justify a period of notice of four weeks.
As the Clause stood, there was no limit to the advance notice which could be demanded from the employer. That was putting a statutory obligation on the employer which could be unreasonable for all practical purposes, because it would give the Minister powers to make regulations which could put an obligation like this on him. In Committee, the Minister was arguing that there was not a statutory obligation and that all that would happen was that the employer could lose some element in the rebate. If we are doing something like that, we are putting the employer in the position of having to abide by this regulation or suffer what amounts to a fine. There is very little difference between placing a statutory obligation on the employer and saying that he will suffer a fine.
In spite of the Government's Amendment, they have not justified fully the reason for the employer having to give four weeks' advance notice. They have made it quite clear that it would be convenient for administrative purposes to have advance notice of this nature, but I do not think they have justified the period of four weeks.
As far as I can see, in Committee two arguments were advanced in support of the measures that the Government have put forward. First, they said that this would help to give speedy payment to the workpeople concerned and would have the effect that an early attempt could be made to place people in other jobs. This would be an advantage if it were the only consequence, but surely the Department's administrative machine should be such that these arrangements could be made irrespective of whether advance notice of this sort was required.
The second reason was that in other countries with similar schemes they had provisions of this sort. I was interested that both in Committee and tonight the Minister made special reference to the position in Sweden. I have tried to make some study of the position abroad, and I hope that the Minister will read the article in the magazine which was issued today, "Moorgate and Old Street Review", in which there is a comprehensive review of the redundancy payments procedure and reference is made to the position in Sweden. If the Minister reads this article and makes a further study, particularly of the position in Sweden, he will see that the scheme there is much different from his scheme, appears to have different aims and appears to be quite different in detailed administrative arrangements.
One point which concerns me is the minimum and maximum number of employees concerned in any such redundancy. Mention was made in Committee of what were the Government's general intentions, and we had another general indication of them from the Minister tonight, but we are giving the Government power to make regulations when we have not a general indication, adequate for the purposes of most employers, of what are the Government's intentions. It worries me to see the amount of delegated legislation which is produced, and it is particularly worrying to see delegated legislation permitted in such a case as this when we cannot see from the Clause as originally drafted, or even the Clause as the Government would amend it, an indication of the lines along which the Government intend to work in making regulations. We appreciate that regulations are necessary for the detailed arrangements of any scheme such as this,


but it is dangerous for us to pass a Bill which gives regulation-making powers before we have had a general indication of what is involved.
That is why we put forward the Amendment. If we had passed the Clause without Amendment it would have given the Minister power to require advance notice to any length of time that he desired, irrespective of the difficulties in which this would involve the employer and irrespective of the financial hardship which might be caused to him if he were unable to comply with the requirement. This is a dangerous kind of delegated legislation, and we see far too much of it. Unless the Minister can give a clearer indication why the four-week period is required and what benefits can accrue from it, it will be difficult for us to withdraw the Amendment.

Mr. Stainton: There is one aspect of the Amendment which was touched on in Committee and which has not been referred to by the Parliamentary Secretary tonight. In defending the general situation in Committee the Parliamentary Secretary adduced two reasons for this procedure of notice. One was that it would allow the Ministry to investigate and arrange the payment of the rebate and the second was to give the employer the all-clear that he would get the rebate.
I am disturbed about the all-clear to the employer that he will get the rebate. The converse is "Thumbs down", telling the employer that he is not likely to get the rebate. I have become particularly concerned on this point because it could well be that the Ministry's administrative machine in giving or not giving the all-clear could be usurping the authority and jurisdiction of the tribunal which is the real authority which has to decide whether the payment is to be made. I hope that if he resists the Amendment the Parliamentary Secretary will at least clarify the point as to how far the Ministry's machine will go in giving what in Committee the Parliamentary Secretary chose to call the all-clear.

Mr. Thornton: I do not really see how the fears which the hon. Member for Sudbury and Woodbridge (Mr. Stainton) has will be realised, because the all-clear which I referred to would be in respect of admitted claims—where the employer has met his liability and is prepared to

pay and gives notice of dismissal. We appreciate that short-time needs special consideration. Within the four weeks the Ministry can indicate whether it is a straightforward case, and the employer will know, before he makes his payment, that he will get the refund. Only if it is a disputed case will it go to the tribunal. In no way can I see that the Ministry will be usurping the functions or powers, or anticipating the decisions, of the tribunal.

Amendment agreed to.

Further Amendments made: In page 21, line 26, leave out paragraph (b) and insert:
(b) in such cases as may be so prescribed, require prior notice that such a claim may arise to be given at or before a time so prescribed, so however that, where the claim would relate to an employer's payment in respect of dismissal, the regulations shall not require the notice to be given more than four weeks before the date on which the termination of the contract of employment takes effect; and.

In line 32, leave out from "he" to "to" in line 33 and insert:
makes a claim or gives prior notice as mentioned in paragraph (a) or paragraph (b) of this subsection".

In line 45 leave out "notice of intention to claim" and insert "prior notice".—[Mr. Thornton.]

Orders of the Day — Clause 29.—(PAYMENTS OUT OF FUND TO EMPLOYEES.)

Mr. Thornton: I beg to move, Amendment No. 56, in page 23, line 22, after "payment" to insert "(a)".
May we take with this the next two Amendments? These Amendments relate to the situation where a worker has been unable to obtain from the employer payment of either the whole or part of the sum due to him under the provisions of the Bill. The Ministry is then empowered by this Clause 29 to make direct to the worker payment which the employer has failed to make. This is a straightforward piece of mechanics, which I hope the House will accept.

Amendment agreed to.

Further Amendments made: In page 23, line 26 after "Minister", insert: "and
(b) any decision of a tribunal requiring the employer's payment to be paid to the employee shall have effect as if it required that payment, or, as the case may be, that


part of it which the Minister has paid, to be paid to the Minister".

In line 27 leave out from "Minister" to "shall" in line 28 and insert "by virtue of this subsection".—[Mr. Thornton.]

Orders of the Day — Clause 30.—(SUPPLEMENTARY PROVISIONS AS TO PAYMENTS UNDER SECTION 29.)

Mr. Thornton: I beg to move Amendment No. 59, in page 24, line 29, to leave out from "Where" to "an" in line 30.
It would be convenient for the House to take with this Amendment the next Amendment, No. 60, for the two are related.
As the Clause stands, the Ministry is given power, under subsection (1), to require an employer to provide information, and to produce documents which may reasonably be required for either of two purposes, first, to determine the amount of rebate due to the employer, and secondly, to determine the amount of guaranteed payment to the worker under Clause 29. In subsection (2) the Clause goes on to make non-compliance with the notice requiring the production of such information a criminal offence, and to lay down penalties. This is apart from the further penalties in subsection (3) for giving false information.
12 m.
We now feel that we should draw a distinction between cases where the information is required in order to determine a claim for rebate, and cases where it is required to determine the amount of the guarantee payment under an exempted scheme to a worker under Clause 29. This is the case where the employer cannot, or will not, pay the worker, and we must be able to enforce production of any evidence needed to enable the Minister to pay the worker on the employer's behalf.
The case where it is simply the employer's own rebate that is at stake is different. It is obviously in the employer's interest to produce whatever evidence is required to facilitate payment of his rebate, and we do not think that there is any need for a criminal sanction in these cases. The Minister already has power under Clause 27(4,c) to require the production of the necessary information in relation to a claim for rebate. The rebate could not be

paid if the necessary evidence substantiating the claim were not produced, and this is sufficient sanction in itself.
The Amendment therefore removes claims for rebate from the scope of this Clause, and therefore from the scope of the penalty in subsection (2). I hope that the House will agree that this is justified.

Amendment agreed to.

Further Amendment made: In page 24, line 37, leave out from "the" to "is" in line 38 and insert "application".—[Mr. Thornton.]

Orders of the Day — Clause 31.—(REFERENCES AND APPEALS TO TRIBUNAL RELATING TO PAYMENTS OUT OF FUND.)

Amendments made: In page 25, line 16, leave out from "or" to "or" in line 18 and insert
prior notice that such a claim may arise is given in accordance with regulations made under section 27 (4) (b) of this Act".

In page 25, line 22, after "made", insert
or such prior notice is given".—[Mr. Thornton.]

Orders of the Day — Clause 32.—(ADVANCES OUT OF CONSOLIDATED FUND.)

Mr. Thornton: I beg to move, Amendment No. 63, Clause 32, in page 26, line 15, to leave out "£5 million" and to insert "£8 million".
This Amendment and the next one are needed because of the increased commitment of the Redundancy Fund arising from the Amendments made in Standing Committee which increased the percentage of the rebate which employers will be able to get from the Fund.

Amendment agreed to.

Further Amendment made: In page 26, line 16, leave out "£15 million" and insert "£20 million".—[Mr. Thornton.]

Orders of the Day — Clause 34.—(STRIKES.)

Mr. Godber: I beg to move, Amendment No. 65, Clause 34, in page 27, line 36, to leave out Clause 34.
I want to make two or three points about this Amendment. First, I am grateful to the Parliamentary Secretary for the steps that he took to enable us to discuss this. There was a technical hitch which might have prevented it being called, but, owing to the assistance which


the Government gave, knowing that we felt strongly about this, we are able to discuss it.
Having said that, I want to say that it is very unfortunate that important issues such as this should have to be discussed at this late hour of the night. It is impossible at this time of the night to give adequate attention to an issue of such importance as this. I therefore want to speak briefly on this, because I think that one can make the points shortly.
We have welcomed the bulk of the Bill, and we support the bulk of it, but we think that it has been brought in the wrong order. It is a useful Measure, and we have tried to improve it in every way possible. We feel, however, that this is a thoroughly bad Clause, which should not be in the Bill.
We wish to delete it because it goes against what we have been seeking to do. It goes against what the Minister of Labour himself is seeking to do in many other aspects. In the Second Reading debate when the Minister referred to this Clause I never heard any Minister so apologetic—and it was right that he should be. I admit that this matter had to be considered in relation to the Bill, but the Minister took the wrong decision, because the Clause is an encouragement, if not an incitement, to people to break their contracts of employment. This is absolutely bad. It is the sort of thing that is causing trouble in industry today, in a whole series of cases throughout the country.
It is not in accord with what the Minister has said on many occasions. He told us that he wanted to see all these matters looked into by the Royal Commission, and that he did not want to legislate on them, yet he is choosing to do so in this Bill, and he has also made its effect retrospective, in that the Contracts of Employment Act will be affected. It has been argued that the relevant provisions of that Act have been allowed to lapse, but it is still in the hands of employers to use them.
If we are to take the line that it ought to be made easier for people to break their contracts we are not facing the issues in front us. That is the serious charge that we bring against the Government. It is one more instance of the Government's talking tough but acting weak. It can do

nothing but harm. No justification has been brought forward for the Clause. During the passing of the Trade Disputes Act the Minister repeatedly said that he did not want to prejudge the issues going before the Royal Commission, but he is doing that here.
Some hon. Members opposite feel that this issue should be dealt with in this way, but the Minister has not taken that view. His view has been that these are issues about which a responsible attitude should be taken, and that they should go to the Royal Commission. If I do not speak for long it is not because I do not feel deeply about this matter. I do, as do all my hon. Friends, and we shall register our protest about it in the strongest way. The Minister and the Government are ill-advised and weak in this matter. This attitude is very harmful to industry today. We deplore the Clause, and I shall ask my hon. Friends to vote against it.

Mr. Mitchell: This Clause, which we seek to delete, interferes with the Contracts of Employment Act, 1963. It must be seen in the context of that Act, the purpose of which was to make sure that a man should know the terms and conditions of his employment, including the benefits, liabilities and duties of that employment. The effect of this Clause is to remove from that Act one of the duties which a man had. The Contracts of Employment Act of 1963 says:
The continuity of an employee's period of employment is not broken …
if
… the employee takes part in a strike, except where the employee has, in taking part in a strike, broken his contract of employment.
If the words after "except" are deleted, as is proposed in the Clause, it will mean, in effect, that continuity of employment will not be broken if a man takes part in a strike in breach of his contract. For legislation to say to a man, "You may break your contract without suffering any loss" is an outrageous principle to accept.
The Minister will probably say that this is something for the Royal Commission to consider, but he said in Standing Committee that, apart from the Trade Disputes Bill, he would
… hesitate to lay before the House any proposals for fresh legislation which attempted to deal with any aspect of the problem of


strikes, in advance of the Royal Commission's report."—[OFFICIAL REPORT, Standing Committee D, 17th June,1965; c. 497.]
Yet this is exactly and precisely what he is doing in this legislation. I suggest very strongly that this amounts to a breach of faith by the Minister, who, having said that he would not bring forward legislation of this sort, has now proceeded to do so.
It may be argued, and I have no doubt that if the Minister were here he would argue, that this is only temporary legislation while the Royal Commission sits. But the Royal Commission is sitting—with all the enthusiasm and speed for which the Labour Party is noted—for half a day a week. If that is the degree of precedence and importance attached to its work, it will be three years before we see the report, and another two years before anything is done. That means that—

Mr. J. J. Mendelson: Would the hon. Gentleman give the House the statistics about how long each week Royal Commissions used to sit when a Conservative Administration was in office?

Mr. Mitchell: When this side of the House suggested that there should be a Royal Commission, we were told by the right hon. Gentleman who is now Prime Minister that it would take minutes and waste years, and then he proceeded to set one up himself. I presume, therefore, that he intended to waste years. That is exactly what will happen.
A precedent will be established over five years that it will not be wrong for a man to go on strike in breach of his contract. That is a disastrous state of affairs to legislate for. What we are saying, in effect, is, "An Englishman's word is his bond, unless he is a trade unionist." [HON. MEMBERS: "Rubbish."] This is quite indefensible. It is an encouragement of the worst trade union practices, and something which the Minister of Labour at least ought to be doing his best to prevent.
It is an encouragement of lightning strikes, because no longer will a man be risking anything if he takes part in one. The Minister of Labour has said of these strikes that they are serious and damaging to the country's economy. He has recently denounced the great rash

of unofficial strikes arising over the past few years and appealed for the honouring of the pledged word. Yet this legislation says straight away that the pledged word is not to count, and that a man will suffer nothing if he breaks his pledged word. [Interruption.]
This is indefensible legislation for the Government to bring forward, especially at a time when the country's economy is on a razor edge and lightning strikes are so severely damaging. The sanctity of a contract is the very basis of a civilised society—[Interruption.]

Mr. Deputy-Speaker (Sir Samuel Storey): Order. We should make much better progress if hon. Members below the gangway would refrain from so much recumbent comment.

Mr. Mitchell: I thank you for that, Mr. Deputy-Speaker.
The sanctity of a contract is the basis of a civilised society. I remember going to a Transport and General Workers' Union summer school and hearing one of the union's national officers laying into the men on this point. He said that if a trade unionist gave his word it should be a pledged word and able to be relied upon by all the parties concerned. Yet here we have this miserable legislation which would take away one of the few restraints on breach of contract that we have.
12.15 a.m.
The newspapers these days concentrate on whether a strike is official or unofficial. I do not believe that that is the important division. The important factor is whether the strike is in breach of contract or not. The Government are removing one of the platforms on which industrial stability can be built. It is a retrograde action.

Mr. John Page: I will speak only briefly and give a paraphrase of what the Clause really means. It means that the Government and the Labour Party take the view that contracts of employment negotiated between employers and employees can be freely broken. They give full encouragement to wildcat strikes in breach of contract. This Clause is an underhanded way of doing it. The people are fed up with being held to ransom by small groups of strikers in breach of contract.

Mr. James Scott-Hopkins: On a point of order Mr. Deputy-Speaker. Following your Ruling just now, is there any way in which you can help the House in restraining the hon. Member for Salford, West (Mr. Orme) and the hon. Member for Liverpool, Walton (Mr. Heffer), who are spending their time during this short debate making interventions from a sedentary position?

Mr. Deputy-Speaker: I have already asked hon. Gentlemen in that part of the House to restrain their comments. They will have an opportunity to speak later on if they wish.

Mr. Page: I can hardly feel grateful to my hon. Friend the Member for Cornwall, North (Mr. Scott-Hopkins) for interrupting me in the full flight of my peroration and I do not think that I need the protection he was seeking to offer from hon. Members opposite, who have taken so much interest and care in following this debate bit by bit.
The people of this country are fed up with being held to ransom by small groups of strikers in breach of contract and it is hon. Members opposite and the Government—who will be the Government for only a short time because of their record—who will be held responsible by the people, who will show their dislike and horror of the way in which the Government are bulldozing through this disgraceful Clause.

Mr. David Steel: Some extravagant language has been used about this Clause but in some respects the Government have brought it upon themselves. I do not regard the Clause as anything to do with the Contracts of Employment Act. It is a "dog's breakfast" of a Clause in the way it is worded.
What we are discussing is not the Contracts of Employment Act but whether, in the calculation of redundancy payments and the terms and length of service, a strike which may have taken place at any time, perhaps in the dim and distant past, should be counted and taken for the period calculated for redundancy payments.
It has always been a right in this country for a man to withdraw his labour

and all this Clause says is that, so far as this Bill is concerned, we are not infringing upon that basic right. To that extent, the Amendment should be rejected.

The Solicitor-General: Of the speeches we have had from the benches opposite, curiously enough only the last was devoted in any way to the effects of the Amendment. We have had a good deal of synthetic indignation from hon. Members of the Conservative Party tonight, but not one of them has considered what the results of their Amendment would be. It is that which I invite the House to consider.
The former Government, when they introduced a penalty clause into the Contracts of Employment Act, provided that any strike in breach of contract broke the continuity of service. In other words, once there was a breach one lost the benefits which that Act was intended to confer. Those benefits were that one was entitled to a certain length of notice according to the years of service one had had.
What is being proposed in the Amendment is, in effect, that the same pattern should be followed in the case of redundancy payments; that is, where there is a break in continuity one loses or, at any rate, diminishes, the redundancy payments. I hope to be able to satisfy the House that this is a quite untenable proposition.
Reference was made by the hon. Member for Harrow, West (Mr. John Page) to wildcat strikes and, of course, there are strikes which all hon. Members, employers and leaders of the trade unions would regard as wholly irresponsible. However, there are other strikes—and in this I hope that I carry all hon. Members with me—which are fully justified. For this purpose it is impossible to distinguish between the two. The position, particularly since the judgments in Rookes v. Barnard, is that most strikes, whether they are official or unofficial, will probably be held to be in breach of contract.
Before Rookes v. Barnard the position was this. It was widely assumed—not perhaps by lawyers—by both sides of industry, employers and workers, that if the workers gave due notice before going on strike they would not be in breach of


contract. That would not be a notice to terminate their contract and it was assumed generally that if they gave a number of days' notice that they were going on strike, unless their demands were met, a breach of contract would not arise.
Then we had Rookes v. Barnard. I am not concerned now with the principal issue of intimidation which was considered in that case but with what was said in the Court of Appeal by Lord Justice Donovan, as he then was, and by Lord Devlin in the House of Lords. What they had to say, in the judgment in one case and the speech in the other, cast a good deal of doubt, to say the least, on the assumption which had been so widely held. The position now is, if those observations are right, that the Contracts of Employment Act, which was passed by the previous Administration, probably goes far wider than it was ever intended to do.
When one has this position of uncertainty—when one may have strikes which all hon. Members would regard as being perfectly justified and when one may have strikes after a certain notice of intention to strike has been given but, nevertheless, the position may very well be that they are held to be in breach of contract and, therefore, continuity of service is interrupted—I must ask the House to consider what the effect would be from the point of view of this Measure.
What would happen would be something like this. A man would become redundant in 20 years from now and he might very well find that he has got no more compensation under this Measure than a man with half his service. He would ask for an explanation, and the employer would say that he had withheld payment because of a strike, say, 10 years previously. One can easily imagine the ill-feeling and misunderstanding that that would cause. There might have been a strike for a short time—a strike for a perfectly good reason—and the result if the Amendment were carried, would necessarily be to interrupt the continuity of service. That would not only create bitterness amongst the workers concerned but could cause considerable difficulty for the employer. I suppose that in those circumstances, most employers, when asked to pay

compensation under this Bill would want to disregard strikes of the remote past that had long since been forgotten, and would want, if they could, to make a full redundancy payment. It would be very difficult for them to do so.
But, quite apart from employers, it would be quite impossible for the redundancy fund, and those who administer it to ignore such strikes. There would be difficulty, if it came to the fund's knowledge, as it would in many cases because the scheme would be administered by local and regional officers of the Ministry of Labour, who would know the industrial history of the concern involved. It would follow that the rebate could not be paid in respect of the period before the continuity was broken. That would mean that the employer, if he was prepared to pay the man for the whole period of his service, would have to meet out of his own pocket that part of the payment which related to the period before the breach of continuity. I submit that that is not a result that any hon. Member would wish to bring about.
I appreciate that, read with other parts of the Bill, this Clause does two things. First of all, it alters the particular provision in the Contracts of Employment Act. Secondly, it applies a measure of time that we find in the Contracts of Employment Act. There are two points here. First of all, one has to apply this principle, which is in the earlier Act, to redundancy payments. For the reasons I have tried to explain, that would produce an extraordinary anomaly in the working of the Bill.
There is the other point, and I do not wish to run away from it, that we should alter the terms of the Contracts of Employment Act itself, as is proposed in Clause 34. The position is that when this Bill becomes law the worker will have two kinds of right ensured to him. The first he will have under the Bill—the right to compensation for redundancy. Secondly, he will continue to have his rights under the Contracts of Employment Act. He will have those two rights side by side—the right to redundancy payment and the right to notice dependent on the length of his service.
It would be an extraordinary position if we tried to apply a different principle in the case of redundancy from the case


of dismissal, and if we said in the one case that the fact of employment was not to be regarded as being interrupted because there has been a strike many years before, and in the second case that there had been an interruption wherever there had been a strike. Perhaps it was a perfectly justified and legitimate strike—nevertheless it is held to be in breach of contract. It seems to the Government that we must apply precisely the same principle in both cases. Therefore, if the House is with me in my argument, acceptance of the Amendment would produce almost absurdity.
We are not concerned in any way to condone breaches of contract. One hon. Member spoke of the sanctity of contract, and I entirely agree with him. Of course, if people break their contracts they must take the consequences. Those concerned may be open to an action for breach of contract—that is the penalty. But what we are concerned with here is not what should happen to those who break their contracts, or what damages they may have to pay if sued for breach of contract, but simply with the circumstances in which redundancy payments should be made. For the reasons I have endeavoured to submit, I suggest that it would make an absurdity in the working of this Measure if we were to accept the Amendment.

12.30 a.m.

Mr. Ronald Bell: The hon. and learned Gentleman the Solicitor-General has at least shown that he realises that this Clause does two things—it alters the Contracts of Employment Act and alters the effect of the Redundancy Payments Bill.
The hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel) asked the House to reject the Amendment moved by my right hon. Friend because, he said, this Clause had no effect on the Contracts of Employment Act. Now that he realises from the speech of the Solicitor-General that it does have an effect, I presume that we shall have his support in the Lobby. It will be rather odd if we do not, because he said that the reason why we would not have his support was that there was no effect, whereas in fact there is. Not only does the Clause repeal that bit of the First

Schedule to the Act, but it repeals it retrospectively. Therefore, an employee can go on strike in breach of contract and nevertheless accumulate seniority for the purposes of the length of notice, and of course, for the purpose of redundancy payment under this Bill.
I do not want to go into all the arguments which the Solicitor-General advanced. They all hinged, quite inconsequentially, on some supposed consequences of the case of Rookes v. Barnard. I do not know whether it is the case that most strikes in this country are in breach of contract. There were suggestions to that effect by various people during proceedings on Rookes v. Barnard. That is not the point here. That is not a legal finding; that is a comment. The view we take is that it is wrong if it is the case that most strikes occur in breach of contract and that the Government ought to regard it as very wrong if strikes occur in breach of contract and not simply say that someone said during the course of the Rookes v. Barnard case that it rather looked as though most strikes occur in breach of contract and therefore we had better strike out of our law any provision which appears to penalise breach of contract. That is what Clause 34 is doing.
My hon. Friend the Member for Harrow, West (Mr. John Page) did not exaggerate when he used strong language about this. It is simply what the Government are doing in relation to this Bill and the Contracts of Employment Act. They are saying in Clause 34 that the fact that a strike is in breach of contract shall no longer matter. How can we have a sensible industrial relations policy if we begin by laying down as a firm principle that strikes in breach of contract and in breach of procedure are perfectly virtuous, or at least neutral things?
Surely the whole movement of our labour relations is in the very opposite direction of trying to give efficacy to longterm agreements concluded between employers and employees, trying to fix a moral and in the end some kind of legal sanction to breaches of those agreements clearly entered into between employer and employee. What the hon. and learned Gentleman has been saying was, I think, because he had to say it; he has been put in that position tonight.
The Solicitor-General has been saying that the Government are turning their backs on that concept and believe it right when a contract of employment is made for employees to be at liberty to break it without any consequences whatever. He is saying that of course if it is a breach of contract, such employees can be sued in the county court, but we all know that that is nonsense, as the National Coal Board itself found.
The real and effective sanction would have been for the law, as in the Contracts of Employment Act and as would have been the case with the Bill, to recognise the validity of these contracts. The Government are making this move as part of their long campaign to placate the unions. The Minister of Labour is not here tonight. I make no complaint about that, for I know that he is engaged elsewhere on very important work in connection with his Ministry. If he were here, I would say to him that it is all very well to make the forthright declarations which he has been making in the last few weeks about having order in labour relations, but they all sound very hollow when what the Government are doing, as distinct from saying, is to introduce Clause 34 and measures of this kind. For those reasons, I hope that my hon. and right hon. Friends will support the Amendment and seek to delete this offending Clause from the Bill.

Mr. Mendelson: I had no intention of intervening in the debate, because the Solicitor-General had put the case perfectly clearly and convincingly, but the hon. Member for Buckinghamshire, South (Mr. Ronald Bell) has made a speech which was a typical example of the persistent attempts by hon. Members opposite to bedevil industrial relations and attack the trade union movement. It would not have mattered if the hon. Member for Harrow West (Mr. John Page) had made the attempt, because, although I have a certain sympathy for the hon. Member, he does not know much about the subject. What makes the matter grave is that a former Minister of Labour should lend himself to a manoeuvre of this kind.
The overwhelming majority of employers would not wish to be saddled with a situation in which industrial relations would be embittered for many

years because someone who, many years before, had engaged in perfectly legitimate and legal withdrawal of labour, officially called by the national executive of his union under the normal rules of trade union activity, felt that later on, if redundancy came to his industry—

Mr. Kenneth Lewis: Is the hon. Gentleman suggesting that when a union engages in a threat to withdraw labour it is in breach of contract? The Clause deals with strikes which are in breach of contract and not with those which are called within the contract.

Mr. Mendelson: I am coming to that. I am first establishing that the overwhelming majority of employers, as those of us who represent industrial constituencies and are in constant touch with employers know, would not want to create the kind of bitterness which would be felt by those who many years before had taken part in perfectly legal industrial disputes and who would be debarred thereby from the scheme if, for reasons due not to the employer, the employee, or the union, but because of technological developments in their industries, they were made redundant.
The House debated this matter in great detail on Second Reading and in Committee. The position arises because of the great uncertainty created by the recent legal decision. There has been ample evidence that all the most responsible trade union leaders and officers in congress assembled and the General Secretary of the Trades Union Congress in long negotiations with the right hon. Gentleman the former Minister of Labour, all those knowing most about industrial relations, believed that there was serious danger after that judgment that normal trade union activities could be held to be in breach of contract. That was the view taken by the Trades Union Congress. It was the view taken by the General Secretary of the T.U.C. in his negotiations with the former Minister of Labour when he was in office.
In these circumstances, the position must be made quite clear. As long as this case has not been invalidated or overruled, it must be laid down that it cannot have long-term penalising consequences upon trade unionists and workers in industry who have engaged in perfectly legitimate industrial activities.

Mr. Godber: Although the hon. Gentleman is quite right in saying that the General Secretary of the Trades Union Congress and trade union leaders generally took that view, I must make clear that I never accepted it as right, any more than I accepted tonight the argument of the hon. and learned Gentleman, who was highly selective in the legal authorities which he quoted. Other legal authorities take an entirely different view. I commend the view of Lord Radcliffe to the hon. Gentleman.

Mr. Mendelson: I have never charged the right hon. Gentleman with accepting the view put to him by the General Secretary of the T.U.C. or by other responsible trade union leaders. I have always deployed that they were unable to persuade him. That was the trouble. That was why no agreement was ever reached between the trade union leaders and the right hon. Gentleman. That was why the General Secretary of the T.U.C. had to make his speech to the Congress, which I quoted in the Second Reading debate on another Bill, in which he gave the answer to what the right hon. Gentleman has said tonight, as he knows.
Because the right hon. Gentleman in a Conservative Administration was not prepared to accept what was regarded as a very sensible interpretation of the present position, as far as the law stands, that is no reason for my right hon. Friend the Minister of Labour and my hon. and learned Friend the Solicitor-General to accept the view put by the former Minister of Labour and deny their own interpretation of what the law is. I am very glad to find that my right hon. Friend agrees in his interpretation with respectable legal opinion and with the expressed considered view of the leaders of the trade union movement.
We have just heard a lot of speeches from the opposite benches full of exaggerated and synthetic indignation, speeches from people who do not represent many trade unionists in this country, as they will admit, and who get on their high horses and take part in the ill-informed propaganda campaign against that trade union movement which they are trying to work up. We have had

some typical examples of that tonight. I hope, therefore, that, if this matter is pressed to a Division, we shall show them that they represent just a minority view. The former Minister of Labour, of course, who is a little bit more intelligent in these matters than some of his back benchers, may regret the Division and its outcome. He usually wants to appear unwilling to strike against the trade union movement. He usually takes great care not to be caught in the act, but tonight he will be caught in the act, and it will be well to have it on the record.

Sir Douglas Glover: The hon. Member for Penistone (Mr. Mendelson) would have made exactly the same speech in support of King John 750 years ago, before Magna Carta. All he is doing is supporting a vested interest. The hon. Gentleman is a lawyer, and he knows that, if a contract means anything at all, it creates obligations on both sides. All we are saying is that, if trade unionists, as individuals or collectively, enter into an agreement, that agreement should not be broken without disadvantages. If a contract of service is broken, the person who breaks it should accept the disadvantages which go with the breaking of it.
The hon. Gentleman knows perfectly well that his speech was no more than a Devil's advocate's speech on behalf of the vested interests of the trade union movement in this country. I do not blame him for doing it, but he was not speaking as a lawyer, because everyone accepts that, in law, if a person accepts an agreement with conditions and he breaks that agreement, he must accept the disadvantages that go with the breaking of it.
That is all that we are asking from this side. In our present society, I am quite certain that it would bring a far greater sense of responsibility into our affairs if the view of this side was accepted by Parliament.

Question put, That the words proposed to be left out to "in" in line 40, stand part of the Bill:—

The House divided: Ayes, 140, Noes 103.

Division No. 260.]
AYES
[12.46 a.m.


Abse, Leo
Allen, Scholefield (Crewe)
Beaney, Alan


Allaun, Frank (Salford, E.)
Bagier, Gordon A. T.
Bennett, J. (Glasgow, Bridgeton)


Alldritt, Walter
Barnett, Joel
Bessell, Peter




Binns, John
Hannan, William
Pentland, Norman


Blackburn, F.
Harrison, Walter (Wakefield)
Probert, Arthur


Blenkinsop, Arthur
Hart, Mrs. Judith
Pursey, Cmdr. Harry


Boardman, H.
Heffer, Eric S.
Reynolds, G. W.


Bottomley, Rt. Hn. Arthur
Houghton, Rt. Hn. Douglas
Rhodes, Geoffrey


Boyden, James
Howarth, Robert L. (Bolton, E.)
Robertson, John (Paisley)


Bray, Dr. Jeremy
Hughes, Hector (Aberdeen, N.)
Rodgers, William (Stockton)


Broughton, Dr. A. D. D.
Hunter, Adam (Dunfermline)
Rose, Paul B.


Brown, Hugh D. (Glasgow, Provan)
Irving, Sydney (Dartford)
Ross, Rt. Hn. William


Brown, R. W. (Shoreditch &amp; Fbury)
Jackson, Colin
Sheldon, Robert


Carmichael, Neil
Jeger, George (Goole)
Short, Rt. Hn. E. (N'c'tle-on-Tyne, C.)


Carter-Jones, Lewis
Johnson, James (K'ston-on-Hull, W.)
Short, Mrs. Renée (W'hampton, N. E.)


Coleman, Donald
Johnston, Russell (Inverness)
Silkin, John (Deptford)


Conlan, Bernard
Jones, Dan (Burnley)
Silverman, Julius (Aston)


Craddock, George (Bradford, S.)
Jones, J. Idwal (Wrexham)
Slater, Mrs. Harriet (Stoke, N.)


Crawshaw, Richard
Jones, T. W. (Merioneth)
Slater, Joseph (Sedgefield)


Cullen, Mrs. Alice
Lawson, George
Small, William


Dalyell, Tam
Leadbitter, Ted
Snow, Julian


Davies, G. Elfed (Rhondda, E.)
Lewis, Arthur (West Ham, N.)
Steel, David (Roxburgh)


Davies, Ifor (Gower)
Lewis, Ron (Carlisle)
Steele, Thomas (Dunbartonshire, W.)


de Freitas, Sir Geoffrey
Loughlin, Charles
Taylor, Bernard (Mansfield)


Dempsey, James
McBride, Neil
Thomas, Iorwerth (Rhondda, W.)


Doig, Peter
McCann, J.
Thomson, George (Dundee, E.)


Duffy, Dr. A. E. P.
McGuire, Michael
Thornton, Ernest


Dunn, James A.
Mclnnes, James
Thorpe, Jeremy


Dunnett, Jack
Mackenzie, Alasdair (Ross &amp; Crom'ty)
Tinn, James


Edwards, Rt. Hn. Ness (Caerphilly)
Mackenzie, Gregor (Rutherglen)
Tuck, Raphael


Ensor, David
Mackie, John (Enfield, E.)
Urwin, T. W.


Evans, Ioan (Birmingham, Yardley)
Mahon, Peter (Preston, S.)
Varley, Eric G.


Fernyhough, E.
Mahon, Simon (Bootle)
Wainwright, Edwin


Finch, Harold (Bedwellty)
Manuel, Archie
Walden, Brian (All Saints)


Fitch, Alan (Wigan)
Mapp, Charles
Walker, Harold (Doncaster)


Fletcher, Ted (Darlington)
Mendelson, J. J.
Wallace, George


Fletcher, Raymond (Ilkeston)
Millan, Bruce
Whitlock, William


Foot, Sir Dingle (Ipswich)
Milne, Edward (Blyth)
Wigg, Rt. Hn. George


Ford, Ben
Morris, Alfred (Wythenshawe)
Williams, Alan (Swansea, W.)


Galpern, Sir Myer
Morris, Charles (Openshaw)
Williams, Clifford (Abertillery)


Garrett, W. E.
Oakes, Gordon
Willis, George (Edinburgh, E.)


Garrow, A.
Ogden, Eric
Woodburn, Rt. Hn. A.


George, Lady Megan Lloyd
O'Malley, Brian
Woof, Robert


Ginsburg, David
Orme, Stanley
Yates, Victor (Ladywood)


Gregory, Arnold
Oswald, Thomas



Hale, Leslie
Pannell, Rt. Hn. Charles
TELLERS FOR THE AYES:


Hamilton, James (Bothwell)
Pearson, Arthur (Pontypridd)
Mr. Joseph Harper and


Hamilton, William (West Fife)
Peart, Rt. Hn. Fred
Mr. Charles Grey.




NOES


Allason, James (Hemel Hempstead)
Gower, Raymond
Peel, John


Astor, John
Grieve, Percy
Percival, Ian


Baker, W. H. K.
Griffiths, Peter (Smethwick)
Pickthorn, Rt. Hn. Sir Kenneth


Bell, Ronald
Gurden, Harold
Pitt, Dame Edith


Bennett, Sir Frederic (Torquay)
Hall-Davis, A. G. F.
Pounder, Rafton


Bennett, Dr. Reginald (Gos. &amp; Fhm)
Harris, Reader (Heston)
Pym, Francis


Berry, Hn. Anthony
Hawkins, Paul
Quennell, Miss J. M.


Birch, Rt. Hn. Nigel
Hay, John
Redmayne, Rt. Hn. Sir Martin


Box, Donald
Heald, Rt. Hn. Sir Lionel
Royle, Anthony


Brinton, Sir Tatton
Hendry, Forbes
Scott-Hopkins, James


Bromley-Davenport, Lt.-Col. Sir Walter
Higgins, Terence L.
Sinclair, Sir George


Brooke, Rt. Hn. Henry
Hogg, Rt. Hn. Quintin
Smith, Dudley (Br'ntf'd &amp; Chiswick)


Brown, Sir Edward (Bath)
Hornsby-Smith, Rt. Hn. Dame P.
Stainton, Keith


Buchanan-Smith, Alick
Howe, Geoffrey (Bebington)
Studholme, Sir Henry


Buck, Antony
Hunt, John (Bromley)
Talbot, John E.


Cole, Norman
Iremonger, T. L.
Taylor, Edward M. (G'gow, Cathcart)


Cooke, Robert
Jopling, Michael
Taylor, Frank (Moss Side)


Cooper-Key, Sir Neill
King, Evelyn (Dorset, S.)
Teeling, Sir William


Crawley, Aidan
Kirk, Peter
Turton, Rt. Hn. R. H.


Crosthwaite-Eyre, Col. Sir Oliver
Legge-Bourke, Sir Harry
Vaughan-Morgan, Rt. Hn. Sir John


Crowder, F. P.
Lewis, Kenneth (Rutland)
Wall, Patrick


Curran, Charles
Litchfield, Capt. John
Webster, David


Dalkeith, Earl of
Lloyd, Ian (P'tsm'th, Langstone)
Wells, John (Maidstone)


Davies, Dr. Wyndham (Perry Barr)
Marten, Neil
Whitelaw, William


Deedes, Rt. Hn. W. F.
Maude, Angus
Williams, Sir Rolf Dudley (Exeter)


Digby, Simon Wingfield
Mawby, Ray
Wills, Sir Gerald (Bridgwater)


Elliot, Capt. Walter (Carshalton)
Maydon, Lt.-Cmdr. S. L. C.
Wilson, Geoffrey (Truro)


Eyre, Reginald
Mills, Peter (Torrington)
Wise, A. R.


Gammans, Lady
More, Jasper
Wolrige-Gordon, Patrick


Gibson-Watt, David
Munro-Lucas-Tooth, Sir Hugh
Woodhouse, Hn. Christopher


Gilmour, Sir John (East Fife)
Murton, Oscar
Wylie, N. R.


Glover, Sir Douglas
Nicholls, Sir Harmar



Glyn, Sir Richard
Osborn, John (Hallam)
TELLERS FOR THE NOES:


Godber, Rt. Hn. J. B.
Page, John (Harrow, W.)
Mr. Ian MacArthur and


Goodhart, Philip
Page, R. Graham (Crosby)
Mr. Geoffrey Johnson Smith.


Goodhew, Victor
Pearson, Sir Frank (Clitheroe)

Mr. Deputy-Speaker: The next Amendment is No. 111, and I understand that it would be convenient to discuss with it the immediately following Amendment, which is No. 69, and Amendment No. 85, in Clause 52, page 40, line 31, leave out from "shall" to "and" in line 32 and insert:
have effect subject to subsection (3) of section 34 of this Act as if the repeal were contained in that section".

The Solicitor-General: I beg to move Amendment No. 111, Clause 34, in page 27, line 40, to leave out from "effect" to the end of line 42 and to insert:
subject to the following provisions of this section, with the omission of the words from 'except' to the end of the sub-paragraph".
I can commend the Amendments to the House in a very few words. The purpose is to remedy an omission in the provisions relating to the effect of strikes on continuity of employment. Clause 34 as it stands provides that strikes after the appointed day—of course, this Bill comes into operation on an appointed day—will not interrupt continuity of employment. By paragraph 6 of Schedule 1 to the Contracts of Employment Act the same effect is achieved for strikes which took place before the appointed day for that Act. So there are two appointed days, the appointed day under the Contracts of Employment Act and the appointed day yet to be fixed under this Bill. We have similar provisions, in regard to the effect of strikes, for the pre-appointed day strikes under the Contracts of Employment Act and the post-appointed day strikes under Clause 34 of this Bill.
But there is a gap between the two appointed days, and as the Bill now stands neither of these provisions covers that intervening period. The new subsection (2)—in Amendment No. 69—puts that right by providing that where a worker has given notice on or after the appointed day on which this Measure comes into force any strike in which he took part during the period between the two appointed days is to be treated like any other strike is treated under this Bill; that is to say, it will not break his continuity of service. These Amendments do not affect the position where notice is given before the Bill comes

into force. In such a case the existing provisions of the Contracts of Employment Act will still apply.
I appreciate that when we are dealing with Clause 34 there is really a fundamental difference between the views of the two sides of the House. Hon. Members, entirely within their rights, have attacked Clause 34, both at this stage and at earlier stages of the Bill, but assuming, as the House has decided, that Clause 34 is to remain, then I suggest that these Amendments are really essential. Without them we should have an absurd position when no strike which was held to be in breach of a contract could break continuity for the purposes of computing rights to redundancy pay unless it happened to take place between 5th July, 1964, which was the appointed day under the earlier Measure, and some time towards the end of this year, when we have the appointed day under this Bill.
That is a state of affairs which, I imagine, no one would wish to bring about. So I would, therefore, invite acceptance by the House of these Amendments.

Mr. Godber: The hon. and learned Gentleman cannot expect us to say anything very kind about Clause 34. We have expressed our views on it. We accept, though, that as the House, in its wisdom or lack of wisdom, has chosen to retain Clause 34, it is logical to have Amendments which bring it into line in this way, and so we shall not resist this Amendment.

Amendment agreed to.

Further Amendment made: In Clause 34, page 27, line 42, at end insert:
(2) For the purpose of computing a period of continuous employment in accordance with Schedule 1 to this Act, the amendment made by the preceding subsection shall have effect in relation to any week beginning after the commencement of the Contracts of Employment Act 1963, whether before or after the passing of this Act.
(3) Nothing in this section shall affect the operation of Section 1 or Section 2 of the Contracts of Employment Act 1963 in relation to any notice given before the passing of this Act, or given after the passing of this Act before the appointed day.—[The Solicitor-General.]

Orders of the Day — Clause 36.—(PAYMENTS EQUIVALENT TO REBATES IN RESPECT OF CERTAIN CLASSES OF EMPLOYEES.)

1.0 a.m.

Mr. Thornton: I beg to move Amendment No. 70, Clause 36, in page 30, line 44, to leave out "in respect of" and to insert "during".
This is a small technical Amendment, and I hope that the House will accept it.

Amendment agreed to.

Orders of the Day — Clause 40.—(PROCEDURE OF TRIBUNALS.)

Amendment made: In Clause 40, page 32, line 28, after second "or" insert:
section (Strike during currency of employer's notice to terminate contract) or".—[Mr. Thornton.]

Mr. Ronald Bell: I beg to move Amendment No. 106, Clause 40, in page 33, line 14, at the end to insert:
(f) for a reference under section 4A of the Contracts of Employment Act 1963 to be reheard by way of appeal, at the suit of any party to the reference, by a tribunal constituted of persons who did not take in the determination which is the subject of the appeal.
All those words would be governed by the opening words of subsection (2), which are:
The regulations to be made under this section may, in particular, include provision
and there is a list of the particular matters for which provision may be made. The effect of the Amendment would be to allow there to be set up an appeal tribunal in respect of references under Section 4A of the Contracts of Employment Act.
Section 4A of that Act has been added to this Bill. I think that both sides of the House are agreed about the need for that section, because it removes the criminal sanctions which until now attached to the failure to give written particulars of the contract of employment to the employee.
It is important that an employer should give those written particulars to an employee within the period which is prescribed by the Contracts of Employment Act, but this requirement, which rightly falls on the employer, is not one which is very appropriate for criminal remedies. It is much more satisfactory that a failure on the part of an employer to provide the particulars should be dealt

with, as in fact is proposed in the new Section 4A, by an appeal by the em-) ployee to a tribunal, and on such appeal the tribunal can order such particulars as it thinks appropriate to form the statement of the contract of employment.
This is a procedure which I think commands general approval. Under the criminal procedure which is in force now, there exists the usual right of appeal. Under the procedure provided in Section 4A there is only recourse to the tribunal which, by virtue of other provisions in the Bill and in the Industrial Training Act, is one of the tribunals set up under that Act.
The position could be somewhat difficult for either an employee or an employer. Let us suppose that the tribunal reaches conclusions about the terms of the contract of employment which seem to either the employee or the employer to be mistaken. They are then recorded as being the settlement required to be made under the Contracts of Employment Act, but they would also have considerable persuasive or evidential effect as to the actual terms of the contract of employment, and on the terms of that contract of employment a lot might turn—perhaps a considerable sum of money, or an entitlement to holidays, pensions, or other benefits, all of which are provided as matters to be covered by the statement of particulars.
It seemed wrong to us and to those who are engaged in industry that there should be no appeal on facts from a relatively humble tribunal. I am sure that it will be a very good tribunal and that it will perform very useful work, but it is not normal in our jurisprudence to entrust the final decision upon civil matters—or even criminal matters—to tribunals of this character, without appeal. The Amendment is designed to provide a modest appeal. It is bound to be modest; I would have found some difficulty in getting it in order if it had been more ambitious, because the Long Title precludes any attempt to set up a new court.
Therefore, the Amendment proposes that the power to make regulations under Clause 40, which allows the Minister to regulate the procedure of these tribunals, shall include a power to authorise a rehearing of one of these appeals before a similar tribunal. It must be a similar


tribunal to keep inside the terms of the Long Title, but it will be constituted of different persons—in other words, other members of the panel, so that if either the employer or the employee is dissatisfied with the first adjudication he can appeal to a second tribunal, which will have the advantage which any tribunal of appeal has, of reviewing the work done by other people and having the opportunity of second thoughts.
This is a very modest proposal, which I hope will commend itself to the Government. What I have said as to the form of it, and the reason for its form, will show that we do not attach any great importance to the wording, and that if an assurance were forthcoming the Amendment would be withdrawn.
To complete the picture I should say that there is already an appeal from a tribunal to the High Court on a point of law, but that is a different matter, and not the kind of thing that I have in mind here. The Solicitor-General will recognise that there is some force in the consideration which I have been putting forward. It is of great importance that the particulars of a contract of employment should not be wrongly recorded. I hope, therefore, that the Government will give consideration to this matter, accepting the Amendment if they feel able to do so, but otherwise giving us the assurance we seek that, in another place—as this matter arises out of the change they are introducing in the Bill of moving from the existing procedure of the ordinary courts to the tribunals under the Industrial Training Act—some appropriate provision of this kind can be made.

The Solicitor-General: The hon. Gentleman has moved the Amendment in very reasonable and persuasive terms. I agree with him that subsection (4,a) represents a considerable improvement and that when we are dealing with this kind of matter it would be far better to have civil rather than criminal proceedings. But the change from criminal to civil proceedings has a bearing on the question of appeal. When someone is convicted of a criminal offence, even if it is only a technical offence, obviously, there should be recourse to some kind of appellant tribunal.
We would all accept that, but somewhat different considerations arise when we are

dealing with a tribunal which decides a civil matter. We are not, under the Bill, setting up new tribunals: we are merely extending the functions of existing tribunals. The interpretation Clause says that "tribunal" means a tribunal established under the Industrial Training Act, 1964.
There is already a right of appeal from those tribunals on a point of law. It so happens that an order under Section 10 of the Tribunals and Inquiries Act, 1958, was made by my noble Friend the Lord Chancellor and my right hon. Friend the Secretary of State for Scotland on 13th July last, which comes into operation today. That is very good timing. The effect of the order is to confer a right of appeal on a point of law from the industrial tribunals to the High Court in England and to the Court of Session in Scotland. To that extent, the right of appeal is already provided.
The effect of the Amendment would be to go a little further and to provide not for an appeal to a superior tribunal, but for a rehearing on a question of fact. We have various courts from which there is no appeal on questions of fact. There is no appeal on questions of fact from a county court without leave and there is no appeal on questions of fact from the decisions of the Official Referee. It is not thought desirable that in every case we should allow an appeal on a question of fact. Most appeals are confined to a question of law. But what the hon. Gentleman is suggesting is not an appeal on a question of fact to a higher court, but a rehearing by a panel simply of equal authority to those who arrived at the original decision. That would be a novel principle to introduce into our law. It would make for delay and confusion
Therefore, although I appreciate what the hon. Gentleman has in mind I suggest to the House that, on balance, the Amendment should be rejected.

1.15 a.m.

Mr. Ronald Bell: I did point out that the reason for our proposing a rehearing by what would admittedly be a court of co-ordinate composition was simply that any other proposal would have been out of order as not falling within the Long Title. Our proposal had to be in this form.
I hoped that the Solicitor-General would address himself to the substance of the matter and indicate that the Government recognise that it was unsatisfactory that this jurisdiction, with its considerable consequences, should exist without any possibility of any appeal whatever by either party, in spite of the fact that the decision of the tribunal might—in practice would have—permitted a breach of contract, with all the considerable consequences one way or the other which would flow from that.

Amendment negatived.

Mr. Thornton: I beg to move Amendment No. 72, Clause 40, in page 33, line 22, to leave out from "1964" to end of line 23 and insert:
other than allowances payable to members of tribunals or assessors".

Mr. Deputy-Speaker: It would be convenient to discuss at the same time Government Amendments No. 73, No. 86 and No. 105.

Mr. Thornton: The purpose is to make it clear beyond doubt that the Minister's power to pay allowances in connection with the tribunal hearings extends to the category of people we have always intended should be covered.

Amendment agreed to.

Further Amendments made: No. 73, Clause 40, in page 34, line 3, leave out from "tribunals" to end of line 5 and insert:
the words 'and to persons giving evidence before such tribunals such allowances' shall be omitted; and at the end of the said section 12(3) there shall be inserted the words 'and may out of moneys so provided pay to any other persons such allowances as he may with the consent of the Treasury determine for the purposes of, or in connection with, their attendance at such tribunals'".

No. 74, Clause 40, in page 34, line 9, after third "or", insert:
section (Strike during currency of employer's notice to terminate contract) or".—[Mr. Thornton.]

Orders of the Day — Clause 42.—(ASSOCIATED COMPANIES.)

Mr. Thornton: I beg to move Amendment No. 75, Clause 42, in page 34, line 41, at end insert:
(2) The preceding subsection shall not affect the operation of section 13 of this Act in a

case where the previous owner and the new owner (as defined by that section) are associated companies; and where that section applies, the preceding subsection shall not apply.
This Amendment is consequential, resulting from the addition of Clause 13 to the Bill.

Amendment agreed to.

Further Amendments made: No. 76, Clause 42, in page 34, line 41, at end insert:
(2) Where an employee is dismissed by his employer, and the employer is a company (in this subsection referred to as "the employing company") which has one or more associated companies, then if—

(a) neither of the conditions specified in paragraphs (a) and (b) of sections 1 (2) of this Act is fulfilled, but
(b) one or other of those conditions would be fulfilled if the business of the employing company and the business of the associated company (or, if more than one, each of the associated companies) were treated as together constituting one business,

that condition shall for the purposes of Part I of this Act be taken to be fulfilled in relation to the dismissal of the employee.
Amendment No. 77, Clause 42, in page 35, line 19, leave out from "employee" to end of line 22 and insert:
of a company is taken into the employment of another company which, at the time when he is taken into its employment, is an associated company of the first-mentioned company, his period of employment at that time shall count as a period of employment with the associated company, and the change of employer shall not break the continuity of the period of employment."—[Mr. Thornton.]

Orders of the Day — Clause 43.—(APPLICATION OF ACT TO CERTAIN EMPLOYMENTS NOT FALLING WITHIN SECTION 22(1).)

Mr. Thornton: I beg to move Amendment No. 78, Clause 43, in page 36, line 3, at end insert:
(3) Without prejudice to the generality of the last preceding subsection, regulations made under this section may provide that section 28 of this Act shall apply to persons engaged in any such employment of a description to which this section applies as may be prescribed by the regulations, as if those persons were employees within the meaning of that section.
The purpose is to give the Minister power to refund the surcharge on National Insurance stamps where it is paid in respect of people who are not employed under a contract of service.

Amendment agreed to.

Orders of the Day — Clause 47.—(PROVISIONS AS TO NOTICES.)

Mr. Thornton: I beg to move Amendment No. 109, Clause 47, in page 38, line 2, to leave out "or address".
This is a drafting Amendment. The provision as drafted refers to a notice being
… left for a person at a place or address …
By deleting the words "or address", the notice will have to be left "at a place".

Amendment agreed to.

Orders of the Day — Clause 49.—(EXPENSES.)

Amendment made: Amendment No. 79, Clause 49, in page 39, line 1, after third "or", insert:
section (Strike during currency of employer's notice to terminate contract) or".—[Mr. Thornton.]

Orders of the Day — Clause 50.—(INTERPRETATION.)

Amendment made: Amendment No. 80, Clause 50, in page 39, line 39, at end insert:
(3) In this Act any reference to the Government of an overseas territory shall be construed in accordance with subsection (6) of section (Employment under Government of overseas territory) of this Act.—[Mr. Thornton.]

The Solicitor-General: I beg to move Amendment No. 81, Clause 50, in page 39, line 39, at the end to insert:
(3) For the purposes of this Act it is immaterial whether the law which (apart from this Act) governs any person's employment is the law of Great Britain, or of a part of Great Britain, or not.
This is a technical Amendment. It is designed to make it clear that where the parties to a contract chose that their legal relationship should be governed by the law of a foreign country, then provided always that the requirements of the Bill are satisfied, the redundancy payment will nevertheless be payable.

Amendment agreed to.

Orders of the Day — Clause 51.—(NORTHERN IRELAND.)

Mr. Thornton: I beg to move Amendment No. 82, Clause 51, in page 40, line

New Schedule

Orders of the Day — DEATH OF EMPLOYER OR OF EMPLOYEE

PART I

DEATH OF EMPLOYER

Introductory

5
1. The provisions of this Part of this Schedule shall have effect in relation to an employee where his employer (in this Part of this Schedule referred to as "the deceased employer") dies.

5, to leave out from "Act" to "with" in line 6.

Mr. Deputy-Speaker: I suggest that it would be convenient for the House to discuss, at the same time, Amendments No. 83 and 84.

Mr. Thornton: That is convenient. The Clause deals with the co-ordination of the Bill with any corresponding legislation which the Government of Northern Ireland introduces.

Amendment agreed to.

Further Amendments made: No. 83, Clause 51, in page 40, line 7, at end insert:
so as to secure that they operate, to such extent as may be provided by the arrangements, as a single system".

Amendment No. 84, Clause 51, in line 12, at end insert:
(3) The Minister may make regulations for giving effect in Great Britain to any such arrangements, and any such regulations may provide that this Act shall have effect in relation to persons affected by the arrangements subject to such modifications and adaptations as may be specified in the regulations, including provision—

(a) for securing that acts, omissions and events having any effect for the purposes of the Northern Irish legislation shall have a corresponding effect for the purposes of this Act (but not so as to confer a right to double payment in respect of the same act, omission or event); and
(b) for determining, in cases where rights accrue both under this Act and under the Northern Irish legislation, which of those rights shall be available to the person concerned.—[Mr. Thornton.]

Clause 52.—(SHORT TITLE, REPEALS AND EXTENT.)

Amendments made: Amendment No. 85, Clause 52, in page 40, line 31, leave out from "shall" to "and" in line 32 and insert:
have effect subject to subsection (3) of section 34 of this Act as if the repeal were contained in that section".

Amendment No. 86, Clause 52, in line 33, after "in", insert "section 12(1) of".—[Mr. Thornton.]

10
2. Section 13 of this Act shall not apply to any change whereby the ownership of the business, for the purposes of which the employee was employed by the deceased employer, passes to a personal representative of the deceased employer.


Dismissal


15
3. Where, by virtue of subsection (1) of section (Implied or constructive termination of contract) of this Act, the death of the deceased employer is to be treated for the purposes of this Act as a termination by him of the contract of employment, the employee shall nevertheless not be treated for those purposes as having been dismissed by the deceased employer if—



(a) his contract of employment is renewed by a personal representative of the deceased employer, or he is re-engaged under a new contract of employment by such a personal representative, and


20
(b) the renewal or re-engagement takes effect not later than eight weeks after the death of the deceased employer.


25
4. Where, by reason of the death of the deceased employer, the employee is treated for the purposes of this Act as having been dismissed by him, he shall not be entitled to a redundancy payment in respect of that dismissal if a personal representative of the deceased employer has made to him an offer in writing to renew his contract of employment, or to re-engage him under a new contract, so that in accordance with the particulars specified in the offer the renewal or re-engagement would take effect not later than eight weeks after the death of the deceased employer and either—


30
(a) the provisions of the contract as renewed, or of the new contract, as the case may be, as to the capacity and place in which he would be employed, and as to the other terms and conditions of his employment, would not differ from the corresponding provisions of the contract as in force immediately before the death, or


35
(b) if, in accordance with the particulars specified in the offer, those provisions would differ (wholly or in part) from the corresponding provisions of the contract as in force immediately before the death, the offer constitutes an offer of suitable employment in relation to the employee,



and (in either case) the employee has unreasonably refused that offer.



5. For the purposes of paragraph 4 of this Schedule—


40
(a) an offer shall not be treated as one whereby the provisions of the contract as renewed, or of the new contract, as the case may be, would differ from the corresponding provisions of the contract as in force immediately before the death of the deceased employer by reason only that the personal representative would be substituted as the employer for the deceased employer, and


45
(b) no account shall be taken of that substitution in determining whether the refusal of the offer was unreasonable.


50
6. Where by virtue of subsection (1) of section (Implied or constructive termination of contract) of this Act the death of the deceased employer is to be treated as a termination by him of the contract of employment, any reference in subsection (2) of that section to section 3 (2) of this Act shall be construed as including a reference to paragraph 3 of this Schedule.


Lay-off and short-time


55
7. Where the employee has before the death of the deceased employer been laid off or kept on short-time for one or more weeks, but has not given to the deceased employer notice of intention to claim, then if after the death of the deceased employer—



(a) his contract of employment is renewed, or he is re-engaged under a new contract, as mentioned in sub-paragraphs (a) and (b) of paragraph 3 of this Schedule, and



(b) after the renewal or re-engagement, he is laid off or kept on short-time for one or more weeks by the personal representative of the deceased employer,


60
the provisions of sections (Right to redundancy payment by reason of lay-off or short-time) and (Supplementary provisions as to redundancy payments in respect of lay-off or short-time) of this Act shall apply as if the week in which the deceased employer died and the first week of the employee's employment by the personal representative were consecutive weeks, and any reference in those sections to four weeks or thirteen weeks shall be construed accordingly.


65



8. The provisions of paragraph 9 or (as the case may be) paragraph 10 of this Schedule shall have effect where the employee has given to the deceased employer notice of intention to claim, and—


70
(a) the deceased employer has died before the end of the next four weeks after the service of that notice, and



(b) the employee has not terminated the contract of employment by notice expiring before the death of the deceased employer.



9. If in the circumstances specified in the last preceding paragraph the employee's contract of employment is not renewed by a personal representative of the deceased

Orders of the Day — PART II

DEATH OF EMPLOYEE

155
16. Where an employer has given notice to an employee to terminate his contract of employment, and before that notice expires the employee dies, the provisions of Part I of this Act shall apply as if the contract had been duly terminated by the employer by notice expiring on the date of the employee's death.


160
17. Where an employer has given notice to an employee to terminate his contract of employment, and has offered to renew his contract of employment, or to re-engage him under a new contract, then if—



(a) the employee dies without having either accepted or refused the offer, and



(b) the offer has not been withdrawn before his death,


165
subsection (3) or (as the case may be) subsection (4) of section 2 of this Act shall apply as if, for the words "the employee has unreasonably refused", there were substituted the words "it would have been unreasonable on the part of the employee to refuse".


170
18.—(1) Where, in the circumstances specified in paragraphs (a) and (b) of subsection (1) of section 4 of this Act, the employee dies before the notice given by him under paragraph (b) of that subsection is due to expire and before the employer has given him notice under subsection (3) of that section, subsection (4) of that section shall apply as if the employer had given him such notice and he had not complied with it.


175
(2) Where, in the circumstances specified in paragraphs (a) and (b) of subsection (1) of that section, the employee dies before his notice given under paragraph (b) of that subsection is due to expire but after the employer has given him notice under subsection (3) of that section, subsections (3) and (4) of that section shall apply as if the circumstances were that the employee had not died, but did not comply with the last-mentioned notice.


180
19.—(1) Where an employee has given notice of intention to claim and dies before he has given notice to terminate his contract of employment and before the period allowed for the purposes of subsection (3) (a) of section (Right to redundancy payment by reason of lay-off or short-time) of this Act has expired, the said subsection (3) (a) shall not apply.


185
(2) Where an employee, who has given notice of intention to claim, dies within seven days after the service of that notice, and before the employer has given a counter-notice, the provisions of sections (Right to redundancy payment by reason of lay-off or short-time) and (Supplementary provisions as to redundancy payments in respect of lay-off or short-time) of this Act shall apply as if the employer had given a counter-notice within those seven days.


190
(3) In this paragraph "notice of intention to claim" and "counter-notice" have the same meanings as in section (Supplementary provisions as to redundancy payments in respect of lay-off or short-time) of this Act.



20. In relation to the making of a claim by a personal representative of a deceased employee, section 21 of this Act shall apply with the substitution, for the words "six months", of the words "one year".


195
21. Subject to the preceding provisions of this Part of this Schedule, in relation to an employee who has died—



(a) any reference in this Act to the doing of anything by, or in relation to, an employee shall be construed as including a reference to the doing of that thing by, or in relation to, any personal representative of the deceased employee, and


200
(b) any reference in this Act to a thing required or authorised to be done by, or in relation to, an employee shall be construed as including a reference to anything which, in accordance with any provision of this Act as modified by this Part of this Schedule (including the preceding sub-paragraph), is required or authorised to be done by, or in relation to, any personal representative of his.


205
22.—(1) Any right of a personal representative of a deceased employee to a redundancy payment, where that right had not accrued before the employee's death, shall devolve as if it had accrued before his death.



(2) In relation to any case where, under any provision contained in Part I of this Act as modified by the preceding provisions of this Part of this Schedule, a tribunal has power

Brought up, and read the First and Second time.

Mr. McBride: I beg to move, as an Amendment to the proposed Schedule, in line 193, after "employee", to insert:
who dies before the end of the period of six months beginning with the relevant date".
The purpose of the Amendment is to put right what is, I believe, a small anomaly in Part II of the proposed Schedule concerning the death of an employee. Clause 21 provides that employees must, in general, claim redundance payments within six months of the date when the payment became due, unless the case has gone before them to a tribunal.
Paragraph 20 of the new Schedule seeks to provide an extended time limit of 12 months in the case where the employee has died and his claim has to be pursued by his personal representatives. In some cases, it might be a considerable time before the personal representatives were in a position to act, and an extended time limit is obviously reasonable. But, as paragraph 20 stands, it has an effect which I am sure was not intended.
If the employee allowed the six months to go by without claiming his payment, he would be debarred from claiming by Clause 21. But if he died at any time within the next following six months his personal representatives could then revive the claim, because paragraph 20 of the new Schedule allows them to claim on behalf of the deceased employee at any time within 12 months of the date on which the payment became due.
That, I think, would clearly be illogical and inconsistent. The employee has had ample time in which to make his claim, and if he fails to do so there is really no case for allowing the claim to be revived because of something that happens after the normal time limit has expired. What, I think, was clearly intended is that only where the employee dies before the six months have expired should there be an

extension of the time limit. I hope that the House will agree that that is what the Amendment secures.

The Solicitor-General: We are grateful to my hon. Friend the Member for Swansea, East (Mr. McBride) for tabling this Amendment in order to supply what was clearly an omission. I invite the House to accept the Amendment.

Amendntent agreed to.

Schedule, as amended, added to the Bill.

Orders of the Day — Schedule 1.—(CALCULATION OF REDUNDANCY PAYMENTS.)

Amendment made: No. 88, in page 41, line 16, at end insert:
(2) Where section (Employment wholly or partly abroad) or section (Modification of right to redundancy payment where previous redundancy payment has been paid) of this Act applies, sub-paragraph (1) of this paragraph shall have effect subject to that section.—[Mr. Thornton.]

Mr. Thornton: I beg to move Amendment No. 89, Schedule 1, page 41, line 17, to leave out "3 and 4" and to insert "4 and 4A".
It might be for the convenience of the House, Mr. Deputy-Speaker, if with this Amendment we took the related Government Amendments Nos. 90 and 91 in Schedule 1, Nos. 94, 95, 99 and 101 in Schedule 4, and the Opposition Amendments to our Amendment No. 91, in line 5, leave out "sixty-fourth" and insert "sixty-third", in line 6, leave out "fifty-ninth" and insert "fifty-eighth", and in line 11, leave out twelve" and insert "twenty-four".

Mr. Deputy-Speaker: I am always in the hands of the House. The Chair likes to know ahead what groupings are proposed, as I pointed out earlier. I understand that the House is willing to accept this suggestion, and I have no objection.

Mr. Thornton: Thank you, Mr. Deputy-Speaker.
These are rather complicated Schedules, and perhaps I might short circuit the whole argument. In Committee, the Opposiiton pointed out that a man with full entitlement who became redundant within 30 weeks, or who contrived to become redundant then, or there was some collusion to that end, would get his 30 weeks' wages, but would not pay Income Tax, and would probably not have to pay National Insurance contributions. That could mean that he would be actually better off during that period than he would have been if he had remained at work.
We accepted the validity of that contention, and we now suggest a tapering arrangement going over 12 months. The Opposition Amendment would carry it over two years, as against the 2½ years they suggested in Committee. Their suggestion is, therefore, just half as generous as ours, and I must ask the House to reject their Amendment. I hope that they will see fit to withdraw their Amendment, as we have moved some way towards the point from which they started.

1.30 a.m.

Mr. Godber: rose—

Mr. Thornton: On a point of order. Could we also consider in this group of Amendments, Amendment No. 100, Schedule 4, in page 47, line 10, leave out from "been" to first "the" in line 11 and insert:
reduced by virtue of paragraph 4A of that Schedule".

Mr. Deputy-Speaker: This is most irregular. I have no objection if the House has no objection.

Mr. Godber: I do not think I have any objection, but I am in some difficulty.

Mr. Deputy-Speaker: I think, therefore, that the Parliamentary Secretary might hold his hand and leave that Amendment for the moment.

Mr. Thornton: It was my mistake. In referring to Amendments Nos. 99 and 101 I should have said Amendments Nos. 99 to 101.

Mr. Deputy-Speaker: I make my second comment tonight. The Chair ought to be informed of what Government Amendments are being taken

together as the Chair must protect every hon. Member. If the Opposition have no objection to what is suggested, I have none.

Mr. Godber: I have no objection. I have some sympathy with you, Mr. Deputy-Speaker. I think that we are all in some difficulty in relation to this matter. All these Amendments hang together.
The Government have gone some way to meet the point we made in Committee when we were able to show quite clearly the complete nonsense which would have arisen had the then provision been allowed to continue. These provisions arranged for tapering off only in the last 30 weeks of employment as a man came up to age 65 or a woman to age 60. There would be grave temptation to abuse and obviously something should be done about it. I have always taken the view that it was wrong to go anywhere near this point and that there should be tapering off over a considerable period because the whole principle of redundancy payments is that there should be some relation to the expectation of continued employment. When one is getting towards retirement age it seems strange that only at the last moment should one take account of the fact.
At the same time, I recognise that opportunities for anyone near the age of 60 are smaller and that is an important factor. We sought to take a point where the person concerned was getting so near the age that it would be reasonable to start tapering and we suggested the period of 2½ years. In these Amendments we have come down to the last two years of employment. I believe that our suggestions would work out in actual practice in a better way and certainly there would be less danger of abuse or collusion arising. I fear that there is some possibility of this, which is something we would all wish to prevent. We welcome the fact that the Government have moved part of the way, but we feel that it would have been better to move the whole way. I think they have made an error and it would have been better to have inserted the figure which we suggested.
The other Amendments appear to be consequential and I add no comments in relation to them.

Amendment agreed to.

Further Amendments made: In Schedule 1, page 41, line 31, leave out paragraph 3.

In line 39, at end insert:
4A.—(1) Where in the case of an employee the relevant date is after the specified anniversary, the amount of the redundancy payment, calculated in accordance with the preceding provisions of this Schedule, shall be reduced by the appropriate fraction.
(2) In this paragraph "the specified anniversary", in relation to a man, means the sixty-fourth anniversary of the day of his birth, and, in relation to a woman, means the fifty-ninth anniversary of the day of her birth, and "the appropriate fraction" means the fraction of which—

(a) the numerator is the number of whole months, reckoned from the specified anniversary, in the period beginning with that anniversary and ending with the relevant date, and
(b) the denominator is twelve.

In page 42, line 33, at end insert:
7. The preceding provisions of this Schedule shall have effect without prejudice to the operation of any regulations made under section 14 of this Act whereby the amount of a redundancy payment, or part of a redundancy payment, may be reduced.—[Mr. Thornton.]

Orders of the Day — Schedule 2.—(CALCULATION OF WEEK'S PAY FOR PURPOSES OF SHORT-TIME.)

Amendment made: In Schedule 2, page 43, line 21, at beginning insert:
Except as may be otherwise provided by regulations made by the Minister."—[Mr. Thornton.]

Orders of the Day — Schedule 4.—(CALCULATION OF REBATES.)

Amendments made: In Schedule 4, page 45, line 5, leave out from "payment" to first "the" in line 6 and insert:
calculated in accordance with paragraphs 1, 2 and 4 of Schedule 1 to this Act, is reduced by virtue of paragraph 4A of that Schedule".

In line 7, at end insert "as so reduced".

In line 29, leave out "the redundancy payment" and insert:
a redundancy payment or part of a redundancy payment.—[Mr. Thornton.]

Mr. Thornton: I beg to move Amendment No. 97, in Schedule 4, page 46, line 37, to leave out from "amount" to "calculated" in line 41.
It may also be convenient with this to take the Amendment in page 47, line 8.
The purpose of these Amendments is to alter the formula for calculating rebate to employers who make payments to redundant workers under an exempt scheme, by which I mean a scheme for

alternative arrangements for redundancy payments which has been agreed with the unions and which has formed the basis for an exemption order under Clause 11.

Amendment agreed to.

Further Amendments made: In Schedule 4, page 47, line 7, leave out "sub-paragraph (b)" and insert:
sub-paragraphs (1) (b) and (2)".
In line 8, at end insert:
12. Where the amount of the agreed payment is less than the amount of the relevant redundancy payment—

(a) the proportion which it bears to the amount of the relevant redundancy payment shall be ascertained, and
(b) the amount of the rebate shall (except as provided by the next following paragraph) be that proportion of the amount calculated in accordance with the preceding provisions of this Part of this Schedule.

In line 9, after "payment", insert:
calculated in accordance with paragraphs 1, 2 and 4 of Schedule 1 to this Act".

In line 10, leave out from "been" to first "the" in line 11 and insert:
reduced by virtue of paragraph 4A of that Schedule".

In line 13, at end insert "as so reduced"—[Mr. Thornton.]

Orders of the Day — Schedule 7.—(EMPLOYEES PAID BY PERSON OTHER THAN EMPLOYER.)

Amendments made: In Schedule 7, page 49, leave out line 12.

In page 49, line 13, at end insert:


Section (Supplementary provisions as to redundancy payments in respect of lay-off or short-time) (1).
The first reference to the employer.


Section (Supplementary provisions as to redundancy payments in respect of lay-off or short-time) (4) and (5).
The references to the employer.

In page 49, line 16, at end insert:


Section (Modification of right to redundancy payment where previous redundancy payment has been paid) (3).—[Mr. Thornton.]
The references to the employer.

Orders of the Day — Schedule 8.—(ENACTMENTS REPEALED.)

Amendment made: In Schedule 8, page 49, line 33, column 3, at end add:
and in subsection (3) of that section the words 'and to persons giving evidence before such tribunals such allowances'".—[Mr. Thornton.]

Order for Third Reading read.—[Queen's consent, on behalf of the Crown, signified]

Bill read the Third time and passed.

Orders of the Day — TELEPHONE CHARGES, HALSTEAD

Motion made, and Question proposed, That this House do now adjourn.—[Mr. O'Malley.]

1.42 a.m.

Mr. Peter Kirk: I apologise for detaining the House further at this hour of the morning, but the matter which I wish to raise is one which affects quite a large number of my constituents, and it is a fairly classic example of the bureaucratic mind at its best. It affects also constituents of my hon. Friend the Member for Maldon (Mr. Brian Harrison), and he has asked me to say that, had he not now left for the remotest parts of the world on a mission for the Colonial Secretary, he would have wished to be here to support me in the protests which I make tonight.
Halstead is a small industrial town in the northern part of Essex, very much associated with my distinguished predecessor, Lord Butler, as Member for Saffron Walden. It lies about 45 miles from London, and has five miles to the south-west another small industrial town, Braintree, and about eight miles to the north-east the purely agricultural and marketing town of Sudbury. These geographical details are of importance in the case I wish to put to the House and to the Assistant Postmaster-General, who I am glad to see here and to whom I apologise for keeping him up late. As the hon. Gentleman knows, we cannot all be masters of our time in this place.
Halstead is a small but a growing town. It was built round the great textile firm of Courtaulds, but in recent years further firms have opened up there, and, during this century, the whole of this part of the Colne Valley has been developed. In the neighbouring villages of Sible Hedingham and Great Yeldham, both of which are affected by the Post Office's action, small plants have been opened and have grown into quite big industries, notably the Rippers wood works at Sible Hedingham and the Whitlock engineering works at Great Yeldham. Also, in Halstead itself further industrial plants have been set down, and there are plans for further industrial expansion.
The problem which I wish to raise tonight springs directly from the 1957

White Paper entitled "Full Automation of the Telephone System". The date is significant, because it will show that I am not making any party political attack. The arrangements were made by a Government which I supported and of which, for a short time, I was a member. But I still think that they were wrong.
The effect of the proposals put forward in the White Paper were eventually to arrange for S.T.D. services throughout the whole of the British Isles. Pending that, as I understand it—although the Assistant Postmaster-General will put me right if I am wrong—the idea was to group the telephone exchanges of the country into some 600 groups. Until S.T.D., anyone could telephone for an unlimited length of time for a small charge within the group in which his exchange was and within the neighbouring groups, but telephone services outside his group and groups adjoining would be charged at a higher rate than had been previously charged for telephone services done on a normal time rate.
For some reason, which, I must admit, neither I nor my constituents can understand, the Halstead area, which included not only the Halstead exchange but also the Earls Colne and Great Yeldham exchanges, was allotted to the Sudbury group rather than to the Braintree group.
As I have said, the town of Halstead has a great deal in common with Braintree and virtually nothing in common with Sudbury, which is in another county. None of the services upon which Halstead relies relates to Sudbury in any way, but a very large number relates to Braintree. Braintree is the nearest railhead and another industrial town, and its connection with Halstead is very close. Braintree is not in my constituency, but in that of my hon. Friend for Maldon, but the interlocking between the two is very close indeed.
The effect of allotting Halstead to Sudbury rather than to Braintree has been to raise charges for telephone calls from that area to London by no less than 50 per cent. If Halstead were allotted to the Braintree area, it would come within the zone which is 35 to 50 miles from the centre of London. By allotting it to Sudbury, which is 52 miles, it automatically comes within the 50 to 75 miles limit.
It might have seemed a logical thing to do in 1958, when these proposals were put forward, but I think that there was a certain tactlessness in going outside the county. At that time, curiously enough, the pattern of telephone calls from Halstead was roughly equal; 50 per cent. went south and west towards London, and roughly 50 per cent. went towards the north and to other places. However, all that has changed now. The position today is that 70 per cent. of all long-distance calls made out of the Halstead area go to the London area—in other words, they go to the area in which they are forced to pay a 50 per cent. increase on the charges they have met up till now—whereas only 30 per cent. go to areas to the north.
The postal authorities in the area have been handling a very large amount of correspondence from infuriated constituents of mine. Their claim is that though subscribers lose on telephone calls to London, they gain on calls to such places as York and Glasgow. However, the plain fact is that they do not want to telephone to York or Glasgow, but to London. The reason is very simple. As I have said, it is a growing industrial area, and we all know that in industrial areas it is necessary to be in touch with the capital and agencies in the capital, particularly Government agencies.
I can give two examples of the situation which has arisen. Messrs. Whit-locks, the engineers, whose works at Great Yeldham are a flourishing and expanding industrial concern, have had their charges for telephone calls to London raised from 2s. to 3s. Only 3 per cent. of the outside telephone calls which they make go anywhere else.
In other words, 97 per cent. of their telephone calls go to London. It is, therefore, fair to say that at one stroke the Post Office has raised their telephone bill, which is very considerable, by 50 per cent., a matter of several hundred pounds for a firm a very large amount of whose produce goes for export. One can see that this is not just a matter of people complaining because they have to pay more; it affects, in a small way, I agree, but, nevertheless, to some extent, the general economic well-being of the country when firms which are trying to do their best in the export drive, when they have been asked to do so by the

present Government and by the previous Administration, are hampered by this decision.
Another firm in Halstead, Evans Electroselenium Instruments Ltd., makes the vast majority of its calls to London because half its entire production goes for exports and, therefore, it is very much concerned with telephone calls about shipping. It is unable to calculate exactly how much of its telephone business is with London, but it is a fair amount because the amount which goes anywhere else is negligible.
The House will readily appreciate that the decision of the Post Office to place this area in an exchange area with which it has never had any connection, which is in a different county and which is eight miles in the wrong direction for nearly all the London calls made from it, has caused the greatest distress, and I should not like the Assistant-Postmaster-General to be under any illusions about the strength of feeling which exists on the subject.
But it is not just companies which are engaged in telephoning to London which are suffering from this decision. Even telephoning within the County of Essex has become a much more expensive business. Because the Halstead area has been allotted to Sudbury rather than to Braintree, it means that the county town of Essex, towards which a large number of telephone calls are directed, has been cut off to a certain extent by this move. As I explained earlier, whereas calls within the same area or an adjacent area are virtually unlimited, calls outside an adjacent area are toll calls and are charged on a minute-by-minute basis.
Chelmsford, the county town of Essex, is 16 miles from Halstead, and yet because all the calls have to go through Sudbury and because between the Sudbury area and the Chelmsford area the Braintree area intervenes, these calls are charged at 4d. a minute. But if anyone there wants to telephone Ipswich or Bury St. Edmunds or Stowmarket—and the nearest of those places is 25 miles from Halstead—he can natter for as long as he likes for 2½d. the whole time—without any limit at all. Surely that is a ridiculous situation.
People are much more likely to want to telephone their own country town—
particularly industrialists, but also other people—than they are to want to telephone to towns in a different county with which they have absolutely no connection at all. I do not understand, and my constituents cannot understand, why this decision has been taken by the Post Office. When there is another exchange area right next door of a similar kind and a similar nature, why are they allotted to an exchange area with which they have no connection, which is further away and which puts up their telephone charges?
I have corresponded with the Assistant Postmaster-General and, with the courtesy which I expect of him—for I have known him many years and respect him greatly—he has written back a very full letter. I have read a very large number of ministerial letters in my time, and I have signed a few, but I reckon that this is one of the most outstanding examples of ministerial temporising that I have ever come across. It contains a sentence which, I think, is worth putting on the record. This is supposed to give consolation to my constituents in this situation. The Minister writes:
Many concessions which must have been of very considerable benefit to customers as a whole have been given by the adoption of the group charges, but no doubt there are exchanges like Halstead where customers feel that they have not benefited to the same extent as those in other exchanges nearby".
That is the understatement of the year. They not only feel that they have not benefited to the same extent; they not only feel that they have not benefited at all; but they feel that they have lost very considerably by it.
I hope very much that the Post Office will reconsider this decision. Surely it is not impossible for the Post Office to realign its telephone services in such a way that the natural order of things, which is all I am asking for, should prevail, instead of this totally artificial zoning arrangement. I hope that the hon. Gentleman will tell me tonight that he will have second thoughts about this matter and look at it again.

1.55 a.m.

The Assistant Postmaster-General (Mr. Joseph Slater): I should, first, like to congratulate the hon. Member for Saffron Walden (Mr. Kirk) on the clarity with

which he has presented his problem tonight—this morning, I should say. It is a problem over which, as he said, he and I have had detailed correspondence, and I have had to tell him that my right hon. Friend can make no change in the charge for calls from Halstead Telephone Exchange.
I think that it will be helpful to the House if I explained first how telephone calls are charged and then how this system relates to Halstead in particular, because I hope that I shall be able to clear up some misunderstandings which appear to have arisen in connection with these telephone calls from Halstead. I should like, first, to go back into history and explain the basis on which calls are charged. Before 1958 each exchange in the country—and, as has already been said by the hon. Member, there are about 6,000 of them—had its own list of charges based on crow flight distances to the others.
In preparation for the introduction of Subscriber Trunk Dialling it was decided to simplify charging arrangements by grouping exchanges together into charging groups, and the reason for this was that the apparatus designed for S.T.D. makes use of routing numbers to control the automatic circulation of calls and to determine the appropriate charges.
It became evident that if the total of such routing numbers could be kept below a certain limit the switching equipment could be simplified and its cost reduced. Under the old system, charges for calls set up by operators were debited by means of tickets, and those for calls dialled by customers were metered automatically. While it would have been possible to design automatic apparatus to carry out about 6,000 routing and charging functions, great savings were available if this number could be kept to about 600. The 6,000 different charge lists were, therefore, as has already been indicated, reduced to 600.
On 1st January, 1958, the new group charging system was introduced and the old system of point to point measurement was abandoned. Each charging group reflected the local community of interest as far as this was possible. The groups are of different shapes and sizes, but the average radius is about seven miles. All exchanges in the group have


the same list of charges and distances are measured from and to a central point in the group. A call from an exchange to another in the same group or to an exchange in any adjacent group became a local call and the cost in many cases was reduced from 6d., 9d. or 1s. to 3d.
Since then local calls from residence lines have been reduced to 2½d. The charges for trunk calls were also affected; many were reduced, some remained the same, and a few were increased. The overall effect was to reduce the cost of local calls very considerably, since the local call area was on average increased from about 80 square miles to an average of 900 square miles. The change in the charges for trunk calls was less high, but many subscribers found that they could call more cheaply than before.
The change was publicised, and this I want to emphasise. A letter of explanation—I have a copy of it here—was sent in advance to every subscriber, and also to the Press and to the Members of Parliament for these areas. I understand that the new system was generally accepted and welcomed at that time. When the group charging system was introduced, Halstead was formed in the Sudbury group of exchanges, together with Great Yeldham, Lavenham, Boxford, Earls Colne, and several others. Naturally, there are also communities of interest with other neighbouring exchanges not in the Sudbury charging group, and this was looked after because the local unit-fee area of the Sudbury group was extended to take in the adjacent groups of Haverhill, Bury St. Edmunds, Stowmarket, Colchester, Ipswich, Braintree and Great Dunmow. In fact, the local call area of Halstead is nearly 1,100 square miles, which is well above the average.
The hon. Gentleman mentioned the cost of calls from Halstead to London. Prior to the introduction of the group charging system, which I have just described, the cost of a call from Halstead to London was 1s. 10d. for three minutes in the full rate period. After 1st January, 1958, the charge became 2s. 3d. for three minutes, and in 1963 my right hon. Friend's predecessor found it necessary to increase the charge to 3s. for three minutes.

Mr. Kirk: What will be the cost of a call from Braintree to London now?

Mr. Slater: I do not know whether I come to that later. If I have not already got the information, I shall seek to get it.
When S.T.D. is provided at an exchange, there are a number of advantages relevant to this question. All dialled calls, whether they are to an exchange near at hand, or to one at the other end of the country, are charged in units of 2d. A caller pays only for the time that he actually uses, and the time that he has for his 2d. varies with the distance between the charging point in his home group of exchanges and the charging point in the distant group.
When S.T.D. facilities are provided at Sudbury Telephone Exchange—which, I hope, will be early in 1967—this will have no effect on the cost of a call from Halstead, but when S.T.D. is provided at Halstead—which should be later in the same year—Halstead subscribers will be able to dial many of their calls to London, and the minimum charge will be as little as 2d. For their 2d. they will get 10 seconds' conversation, 15 seconds during the cheap rate. If their call lasts as long as three minutes, they will pay 3s. in the full rate period—that is the minimum charge which they now pay for a call to London connected by an operator.
The suggestion has been made that Halstead has a much greater community of interest with Braintree than with Sudbury, and that the Halstead Telephone Exchange should be transferred from the Sudbury charging group and included in the Braintree charging group. I can see the attractions in this idea from the point of view of telephone users in the Halstead area who make many calls in the London direction—and I fully realise that there are businesses in Halstead which frequently need to contact London—since this change would have the effect of reducing the cost of calls connected by the operator from 3s. for three minutes to 2s. for three minutes, and with S.T.D. the time obtained for 2d. would be increased from 10 seconds to 15 seconds at the full rate. But there are disadvantages. Halstead subscribers would no longer be able to have local calls to places as far afield as Bury St. Edmunds, Stow-market and Ipswich, and the cost of trunk calls to the North would be increased.
It may be that some Halstead subscribers would be prepared to tolerate


these disadvantages, but, as I have said earlier, boundaries must be drawn somewhere. There are many exchanges with a community of interest with London, and if my right hon. Friend adjusted one boundary, to make the cost of calls to London cheaper for Halstead subscribers—and we do get these applications from Members of Parliament and even from local authorities—he would have to adjust others. This, in turn, would bring complaints from subscribers who found the cost of calls they wished to make had been increased by the change, and it would be impossible to draw the line.
There are many places in the country where subscribers could obtain reductions in the cost of calls to places in which they have a particular interest if the boundaries of charging groups were altered, but any alteration inevitably causes an increase in charges in the opposite direction. If we started to alter

our boundaries to meet individual wishes we should forever have to be changing them. The hon. Member will appreciate that point. Apart from this, there are many towns with a community of interest with London, and if we rearranged our boundaries so that all calls to London were reduced it would cause a loss in revenue which we could not afford.
The group charging system was applied uniformly throughout the country, equally in the Halstead area as elsewhere, and there are no grounds for claiming that Halstead subscribers are unfairly treated in this respect. I regret to have to inform the hon. Member—who has put the case so clearly on behalf of his constituents tonight—that my right hon. Friend can make no change in the charge for calls from the Halstead Telephone Exchange.

Question put and agreed to.

Adjourned accordingly at seven minutes past Two o'clock.